Private & Confidential EXECUTION VERSION Dated 13 February 2008 OLINDA STAR LTD. (1) as Borrower and ING BANK N.V. (2) as Arranger and THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN (3) as Lenders and ING BANK N.V. (4) as Facility Agent and ING...

EXHIBIT 10.5

 

Private & Confidential    EXECUTION VERSION        

 

  

Dated 13 February 2008

   

 

   OLINDA STAR LTD.    (1)
   as Borrower   
   and   
   ING BANK N.V.    (2)
   as Arranger   
   and   
   THE BANKS AND FINANCIAL INSTITUTIONS   
   NAMED HEREIN    (3)
   as Lenders   
   and   
   ING BANK N.V.    (4)
   as Facility Agent   
   and   
   ING BANK N.V.    (5)
   as Security Trustee   

 

 

PROJECT LOAN AGREEMENT

in respect of a loan facility of

up to US$310,000,000 relating

to one semi-submersible drilling rig

 

 

 

LOGO

Contents

 

Clause    Page  

1

   

Purpose and definitions

      1   

2

   

The facility

      37   

3

   

Conditions

      38   

4

   

Advances

      42   

5

   

Interest and Interest Periods; alternative interest rates

      44   

6

   

Reduction, prepayment

      47   

7

   

Fees and expenses

      51   

8

   

Payments and Taxes; accounts and calculations

      52   

9

   

Representations and warranties

      55   

10

   

Covenants and Undertakings

      62   

11

   

Events of Default

      70   

12

   

Indemnities

      76   

13

   

Unlawfulness and increased costs; mitigation

      79   

14

   

Set-off and pro rata payments

      82   

15

   

Assignment, substitution and lending offices

      83   

16

   

Facility Agent, Security Trustee and Reference Banks

      86   

17

   

Notices

      96   

18

   

Miscellaneous

      96   

19

   

Limited Recourse

      97   

20

   

Technical Adviser

      97   

21

   

Governing law and jurisdiction

      100   

Schedule 1 The Lenders and their Commitments

      101   

Schedule 2 Form of Drawdown Notice for Principal Advances/Intercompany Construction Interest Advance/Swap Advances

      102   

Schedule 3 Conditions Precedent

      103   
  

Part 1 - Documents and evidence required as conditions precedent to the obligations of the Beneficiaries generally

      103   

  

Part 2 - Conditions Precedent to Drawdown of the First Advance

      107   
  

Part 3 - Conditions Precedent to Drawdown of any Subsequent Advance

      110   
  

Part 4 - Conditions Precedent to the Date of Yard Acceptance

      112   
  

Part 5 - Conditions Precedent to Completion Date

      115   

Schedule 4 Form of Transfer Certificate

      118   

Schedule 5 Description of the Rig

      122   

Schedule 6 Schedule of Minimum Repayment Amounts

      123   

Schedule 7 Project Documents containing the Guarantee Rights and the Rig Rights

      124   

Schedule 8 Mandatory Costs Formula

      125   

Schedule 9 Group Structure Chart

      127   

Schedule 10 Project Expenditure Certificate

      128   

Schedule 11 Pro Forma Budget

      129   

Schedule 12 Form of Pre-Completion Guarantee Supplement

      132   

THIS AGREEMENT is dated 13 February 2008, and made BETWEEN:

 

(1)   OLINDA STAR LTD., a company limited by shares incorporated under the laws of the British Virgin Islands, with company number 1049761 and its registered office at Xxxxxxxxxx Plaza, Wickhams Cay 1, 2nd Floor, Road Town, Tortola, British Virgin Islands, as borrower;

 

(2)   ING BANK N.V., a banking institution incorporated under the laws of The Netherlands acting for the purposes of this Agreement through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, as arranger;

 

(3)   BANKS AND FINANCIAL INSTITUTIONS whose names and addresses are set out in Schedule 1, as lenders;

 

(4)   ING BANK N.V., a banking institution incorporated under the laws of The Netherlands acting for the purposes of this Agreement through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, as facility agent; and

 

(5)   ING BANK N.V., a banking institution incorporated under the laws of The Netherlands acting for the purposes of this Agreement through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, as security trustee.

IT IS AGREED as follows:

 

1   Purpose and definitions

 

1.1   Purpose

 

1.1.1   This Agreement sets out the terms and conditions upon and subject to which the Lenders agree, according to their several obligations, to make available to the Borrower a loan facility of up to three hundred and ten million Dollars ($310,000,000) to be used for the purpose of financing part of the Total Cost and to meet certain interest and commitment fee expenses;

 

1.1.2   the Borrower shall apply the proceeds of all Principal Advances solely towards payment of the Total Cost;

 

1.1.3   no Beneficiary is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

 

1.2   Definitions

In this Agreement, unless the context otherwise requires:

“Account Bank” means ING Bank N.V. acting for this purpose through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx;

“Accounting Principles” means, in relation to any person other than the Head Charterer, generally accepted accounting principles in Brazil and, in relation to the Head Charterer, generally accepted accounting principles in The Netherlands;

“Accounting Reference Date” means 31 December;

“Accounts” means the Project Account, the Proceeds Account, the Earnings Account and the Debt Service Reserve Account;

“Accounts Pledge” means the Dutch deed of pledge (“eerst pandrecht”) in relation to the Project Account, the Proceeds Account, the Earnings Account and the Debt Service Reserve Account executed or, as the context may require, to be executed by the Account Bank, the Borrower and the Head Charterer in favour of the Security Trustee as pledgee, in the Agreed Form;

 

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“Actual Operating Costs” means the total of the costs and Taxes incurred by the Borrower, the Head Charterer and/or the Sponsor in relation to the operation of the Rig and the Earnings, including, but not limited to, the costs incurred in connection with the maintenance, insurance and repair of the Rig and the fulfilment by the Borrower of its obligations under the Bareboat Charter and clauses 7.1.1, 7.1.2, 7.1.5, 7.1.6, 7.2, 7.3.5, 7.3.6, 7.3.10, 7.3.14 (but only insofar as the indemnity obligations under clause 7.3.14 relate to the matters referred to therein which arise out of (i) any failure by the Sponsor to comply with any applicable law, regulation or order, or (ii) the Rig becoming an obstruction to navigation prior to the Rig becoming a wreck) and 9 of the General Assignment, the Head Charterer of its obligations under the Bareboat Charter, clauses 7.1.1, 7.1.2, 7.1.5, 7.1.6, 7.2, 7.3.5, 7.3.6, 7.3.10, 7.3.14 and 9 of the General Assignment and the Charter and the Sponsor of its obligations under the Services Agreement and clauses 8.2.2, 8.2.7 and (save for clause 11.3.4) 11 of the Deed of Undertaking;

“Additional Cost Rate” has the meaning given to it in Schedule 8;

“Advances” means the Principal Advances, the Swap Advances, the Interest Advances and the Intercompany Construction Interest Advance (each an “Advance”);

“Affiliate” means any person directly or indirectly controlling, controlled by or under common control with any other person (for purposes of this definition, “control” means the power to direct the management or policies of a person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise; provided that the direct or indirect ownership of fifty-one per cent (51%) or more of the voting share capital of a person is deemed to constitute control of that person, and “controlling” and “controlled” have corresponding meanings);

“Agent” means either the Facility Agent or the Security Trustee as applicable (together the “Agents”);

“Agreed Form” in relation to any document, means that document in form, substance and terms approved in writing by the Facility Agent (acting on the instructions of the Lenders) or otherwise in accordance with any such other approval procedure detailed in any relevant provision of this Agreement and any other Facility Document;

“Allocation Period” means (i) the period commencing on the Initial Charter Hire Date and ending on the first Application Date, and (ii) each subsequent period commencing on the last day of the previous Allocation Period and ending on the next following Application Date;

“Applicable Law” means, in relation to any jurisdiction or the European Union, any law, regulation, treaty, directive, decision, rule, regulatory requirement, judgment, order, ordinance request, guideline or direction or any other act of any Government Entity of such jurisdiction or of any EU Institution whether or not having the force of law and with which any relevant person is required to comply, or with which it would, in the normal course of its business, comply;

“Application Dates” means (i) the Quarter Date falling at the end of the first full Quarter Period following the Charter Date of Acceptance, (ii) each Quarter Date (in each case subject to clause 8.3) falling subsequently to the Quarter Date referred to in paragraph (i) above within the Security Period and (iii) the Final Maturity Date, and “Application Date” means any of them;

“Appraisers” means Xxxxxxx Xxxx, Xxxxxx and Fearnley Offshore or such other suitably qualified person or persons from time to time appointed by the Facility Agent (acting on the instructions of the Majority Lenders) following consultation with the Sponsor to provide valuations of the market value of the Rig for the purposes of paragraph 7(k) of Part 5 of Schedule 3;

“Approved Brokers” means Xxxxx Ltd or HSBC Insurance Brokers Limited or such other firm or firms of insurance brokers as may from time to time be approved in writing by the Security Trustee;

 

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“Approved Location” means (i) any location in Brazilian waters up to a water depth of 1,100 metres and as the Charterer may require under the Charter, provided that location is within the co-ordinates set out in the “Concession Agreement” referred to in clause 1.1 of the Charter or, as the case may be, (ii) any other location as may be permitted pursuant to and in accordance with clauses 7.1.5 and 7.1.6 of the General Assignment;

“Approved Transfer” means the sale of up to fifty per cent. (50%) of the issued share capital in the Borrower which is on terms, and to a party, acceptable to the Facility Agent and which has been consented to in advance by the Facility Agent, in each case acting on the instructions of all the Lenders (acting reasonably);

“Arranger” means ING Bank N.V. of Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx;

“Assigned Account Documents” means, in relation to any Account, all certificates of deposit, deposit receipts and other instruments and securities relating to that Account, and the Assigned Monies in relation to that Account or any of them, and means together all certificates of deposit, deposit receipts and other instruments and securities relating to each of the Accounts and all of the Assigned Monies;

“Assigned Documents” means the Charter, the Bareboat Charter, the Construction Contract, the Hedging Agreements, each Material Contract, the Management Agreement, the Sub-Contract Agreement, the Parent Guarantee and each document pursuant to which the Head Charterer or the Borrower has the benefit of any Rig Rights;

“Assigned Monies” means, in relation to any Account, all monies from time to time credited to, and for the time being standing to the credit of, that Account and all interest and other amounts from time to time payable in respect of, or accruing to, that Account, and means together all monies from time to time credited to, and for the time being standing to the credit of, each of the Accounts;

“Assigned Property” means

 

  (1) in relation to any Security Party, all of that Security Party’s rights, title, interest and benefit (present and future, actual and contingent) in and to any of the Collateral including that Security Party’s rights to receive monies and make claims for damages, and any termination rights of that Security Party, in, to, under and pursuant to:

 

  (a) the Assigned Documents to which that Security Party is a party;

 

  (b) those Earnings payable to, or otherwise received by, that Security Party;

 

  (c) any Account in which that Security Party has an interest;

 

  (d) any Assigned Monies in relation to any Account pledged by that Security Party;

 

  (e) the Assigned Account Documents relating to that Account;

 

  (f) the Insurances (but excluding any Liability Insurance Proceeds);

 

  (g) the Requisition Compensation;

 

  (h) the Hedging Receipts;

 

  (i) the Assigned Property Proceeds; and

 

  (j) the Rig Rights Proceeds;

 

3

  (2) in relation to the Rig, all the right, title, interest and benefit of the Borrower and/or the Head Charterer (present and future, actual or contingent) in, to and in connection with:

 

  (a) the Rig Rights;

 

  (b) the Earnings;

 

  (c) the Insurances (but excluding any Liability Insurance Proceeds);

 

  (d) the Assigned Documents;

 

  (e) any Requisition Compensation; and

 

  (f) the Hedging Agreements;

“Assigned Property Proceeds” means all and any monies, property and other assets representing or deriving from all or any of the Secured Property and the security created by any Security Document;

“Auditors” means BKR International or such other firm approved in advance by the Facility Agent acting on the instructions of the Majority Lenders (such approval not to be unreasonably withheld or delayed);

“Authorisation” means, when required by applicable law or contract in relation to the Rig, any Assigned Property or a party to the Transaction Documents or otherwise required by the terms of, or to ensure the validity, enforceability or effectiveness of, any of the Transaction Documents, an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration;

“Availability Period” means the period commencing on the date on which all the conditions precedent set out in clause 3.1 and Part 1 of Schedule 3 are satisfied and ending on the earliest to occur of:

 

  (a) in the case of the Principal Advances:

 

  (i) 13 June 2009; and

 

  (ii) the Completion Date; and

 

  (b) in the case of any Interest Advance and any Swap Advance, the Initial Charter Hire Date,

unless extended in writing by the Facility Agent (with consent of all Lenders) pursuant to clause 16.13.2;

“Banking Day” means a day (other than Saturday or Sunday) on which banks are open for normal banking business in London, New York City, Amsterdam and Rio de Janeiro;

“Bareboat Charter” means the bareboat charter entered into between the Borrower and the Head Charterer dated on or about the date hereof, in the Agreed Form;

“Bareboat Hire Rate” means all amounts from time to time payable by the Head Charterer to the Borrower under or pursuant to the Bareboat Charter;

“Basel 2 Accord” means the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004;

“Basel 2 Approach” means, in relation to any Lender, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel 2 Accord) adopted by that Lender (or any of its Affiliates) for the purposes of implementing or complying with the Basel 2 Accord;

 

4

“Basel 2 Regulation” means (a) any applicable law implementing the Basel 2 Accord and (b) any Basel 2 Approach adopted by a Lender;

“Beneficiaries” means together the Facility Agent, the Security Trustee, the Arranger, the Lenders and the Hedging Provider and “Beneficiary” means any of them;

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired (but not ordinary trade credit), (vi) finance leases and hire purchase contracts, (vii) Derivatives Contracts, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

“Borrower” means Olinda Star Ltd., a company limited by shares incorporated under the laws of the British Virgin Islands, with company number 1049761 and its registered office at Xxxxxxxxxx Plaza, Wickhams Cay 1, 2nd Floor, Road Town, Tortola, British Virgin Islands, as borrower;

“Borrower Moneys” means together:

 

  (a) payments in respect of Rig Rights made to the Borrower in accordance with clause 6 of the Deed of Proceeds and Priorities;

 

  (b) payments made to the Borrower in respect of proceeds of the Insurances less than the Casualty Amount prior to an Event of Default in accordance with clause 6.1.1 of the Deed of Proceeds and Priorities;

 

  (c) payments made to the Borrower in respect of proceeds of the Insurances in excess of the Casualty Amount prior to an Event of Default in accordance with clause 6.1.2 of the Deed of Proceeds and Priorities; and

 

  (d) payments made to the Borrower pursuant to clause 9 of the Deed of Proceeds and Priorities in respect of the balance of any Total Loss Proceeds after application of such Total Loss Proceeds in accordance with clause 6 of the Deed of Proceeds and Priorities and clause 6.5 hereof;

“Borrower Share Pledge” means the share pledge over the whole of the issued share capital of the Borrower executed or to be executed by Constellation in favour of the Security Trustee;

“Break Costs” means the amount (if any) by which:

 

  (a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in an Advance or Loan to the last day of the current Interest Period in respect of that Advance or Loan, had the principal amount received been paid on the last day of that Interest Period,

exceeds:

 

  (b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount received by it on deposit with a leading bank in the London Interbank Market for a period starting on the Banking Day following receipt or recovery and ending on the last day of the current Interest Period;

 

5

“Budget” means:

 

  (a) a budget of the projected Project Cost of, and an over-view of the milestone payments required in relation to, the Project in the form set out in Schedule 11 to be delivered by the Borrower to the Facility Agent pursuant to clause 3.1; and

 

  (b) any further and updated budget relating to the Project in the form set out in Schedule 11 delivered by the Borrower to the Facility Agent in respect of that period pursuant to clause 14.1.3 of the Deed of Proceeds and Priorities;

“Builder” means together Mauá Jurong LLC and Mauá Jurong S.A. or, as the context may require, either of them;

“Builder Acknowledgement” means the agreement comprising a notice issued or, as the context may require, to be issued by the Borrower to the Builder and copied to the Security Trustee pursuant to which, inter alia, the Borrower gives notice to the Builder of the Mortgage and an acknowledgment issued or, as the context may require, to be issued by the Builder pursuant to which, inter alia, the Builder consents to, and recognises the rights of the Beneficiaries to enforce, the Mortgage, upon terms acceptable to the Majority Lenders;

“Bulletin of Measurement” means the document called the “Measurement Report” prepared each month at the end of a Measurement Period by the Head Charterer and the Charterer in accordance with the provisions of clause 7 of the Charter and countersigned by each such party measuring the performance by (a) the Head Charterer of its obligations under the Charter and (b) the Rig in accordance with the Charter and detailing (inter alia) (i) any fines levied by the Charterer pursuant to clause 9 of the Charter and (ii) any other events or circumstances resulting in a reduction in Charter Rate under the Charter and (iii) any Period of Off Hire resulting in a suspension of the obligation to pay Charter Rate under the Charter and (iv) any refund by the Charterer to the Head Charterer in respect of amounts previously deducted by the Charterer from Charter Rate under the Charter paid to the Head Charterer, in each case in the Measurement Period to which the Bulletin of Measurement relates;

“BVI Companies” means Timbauba, Guararapes and Skycrest, and “BVI Company” means any of them;

“Casualty Amount” means thirty five million Dollars (US$35,000,000) or the equivalent in any other currency;

“Charter” means the charter agreement no. 2050.0028827.07.2 dated 5 February 2007 entered into between the Head Charterer and the Charterer pursuant to which the Head Charterer agreed to charter the Rig and the Charterer agreed to take the Rig on charter, as amended from time to time by a Permitted Amendment or with the prior written consent of the Facility Agent;

“Charter Compensation” means any amount payable by the Head Charterer to the Charterer and/or any reduction in any amount payable by the Charterer to the Head Charterer, in each case, under the Charter, due to any delay in the Charter Date of Acceptance;

“Charter Date of Acceptance” means the date on which the Charterer accepts the Rig in accordance with the Charter and the Services Agreement, provided that the Borrower has complied with the last paragraph of clause 10.3.16;

“Charter Event” means:

 

  (a) a Charter Rate Reduction Event; or

 

  (b) an Exemption from Payment Event;

“Charter Rate” means the full amount of that part of the daily rate payable under the Charter in Dollars (being initially two hundred and twenty nine thousand and five hundred Dollars ($229,500)), as adjusted by the Charterer pursuant to clause 6.2.1 of the Charter;

 

6

“Charter Rate Reduction Event” means any event or circumstance which will or may result in any reduction in, or cessation of, payment of the Charter Rate;

“Charterer” means Petroléo Brasileiro S.A. - Petrobras, a mixed capital company incorporated under the laws of Brazil with its head office at Xxxxxxx Xxxxxxxxx xx Xxxxx - 00, Xxxx of Xxx xx Xxxxxxx, Xxxxx xx Xxx xx Xxxxxxx, Xxxxxxx Xxxxxxxx of Brazil;

“Charterer Acknowledgement” means the agreement (in the Agreed Form set out in Part 2 of Schedule 1 to the General Assignment) comprising a notice of assignment issued or, as the context may require, to be issued by the Head Charterer to the Charterer and copied to the Security Trustee pursuant to which, inter alia, the Head Charterer gives notice to the Charterer of the assignment relating to the Rig and the Charter on the part of the Head Charterer contained in the General Assignment and an acknowledgement of the notice of assignment issued or, as the context may require, to be issued by the Charterer to the Head Charterer and copied to the Security Trustee pursuant to which, inter alia (i) the Charterer consents to the assignment on the part of the Head Charterer (in so far as it relates to the Rig and the Charter) pursuant to the General Assignment (unless the Head Charterer shall have previously obtained the consent of the Charterer to the assignment by the Head Charterer of its rights, benefits and interest in the receivables under the Charter and the Head Charterer shall have already provided the Security Trustee with evidence of such consent, in which case the Charterer Acknowledgement will not be required to contain a further consent to the assignment of receivables under the Charter on the part of the Head Charterer), (ii) the Charterer acknowledges the assignment on the part of the Head Charterer (in so far as it relates to the Rig and the Charter) pursuant to the General Assignment, (iii) the Charterer agrees, subject to the terms of the Charterer Acknowledgement, to release the Rig following a termination of the Charter in accordance with clause 11.1 thereof and (iv) the Charterer consents to, and recognises the rights of the Beneficiaries to enforce, the Mortgage and the assignment (in so far as it relates to the Rig and the Charter) pursuant to the General Assignment, upon terms acceptable to the Majority Lenders;

“Charterer Pollution Letter” means a letter or other agreement in form and substance satisfactory to the Security Trustee (acting on the instructions of the Lenders) duly entered into by the Charterer whereby the Charterer agrees, for the benefit of, and enforceable by, the Beneficiaries, that it will assume, discharge and indemnify each of the Beneficiaries for and against, any liability or claim in excess of one million Dollars ($1,000,000) relating to or arising as a result of any pollution caused by or resulting from the operations of the Rig;

“Classification” means the class notation “Offshore Semi-Submersible Drilling Unit with Unrestricted Navigation” with the Classification Society and such other additional class notations (e.g. relating to self propelled or operating environment or fatigue analysis) in relation to the Rig as the Security Trustee shall, at the request of the Borrower, have agreed in writing which shall be treated as the Classification of the Rig, for the purposes of this Agreement and the other Facility Documents, provided that, until the Date of Yard Acceptance, such class notation shall be endorsed as being “laid up”;

“Classification Society” means Bureau Veritas or such other classification society (being a member of the International Association of Classification Societies) which the Security Trustee shall, at the request of the Borrower, have agreed in writing shall be treated as the Classification Society of the Rig for the purpose of this Agreement and the other Facility Documents;

“Closing” means the time at which the First Advance is made;

“Closing Date” means the date on which Closing occurs;

“Collateral” means any and all assets over or in respect of which any Encumbrance is created or expressed to be created by any Security Party in favour of the Beneficiaries or any of them;

“Collateral Instruments” means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an

 

7

obligation (with or without security) to pay, discharge or be responsible directly or indirectly for any indebtedness or liabilities of any person and includes any documents or instruments creating or evidencing an Encumbrance;

“Commitment” means in relation to a Lender and at any relevant time the amount set out opposite its name in column (3) of Schedule 1 and/or, in the case of a Transferee, the amount specified in the relevant Transfer Certificate, as reduced, in each case, by any relevant term of this Agreement;

“Commitment Fee” means the commitment commission payable by the Borrower pursuant to clause 7.1.2;

“Commitment Fee Date” subject always to clause 8.3, means each of (a) the first Quarter Date after the date of this Agreement, (b) each Quarter Date thereafter during the Availability Period, and (c) the last day of the Availability Period;

“Completion Date” means the date upon which all of the conditions specified in clause 3.7 have been satisfied in full or, as the case may be, waived pursuant to clause 3.8;

“Compliance Certificate” means a certificate in the form or substantially in the form of schedule 1 to the Deed of Undertaking to be provided by the Sponsor and Constellation to the Security Trustee pursuant to clause 10 of the Deed of Undertaking;

“Compulsory Acquisition” means requisition for use or title or other compulsory acquisition, nationalisation, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Rig by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for hire not involving requisition for title;

“Constellation” means Constellation Overseas Ltd., a company organised under the laws of the British Virgin Islands, with company number 1020641, and with its registered office at Xxxxxxxxxx Plaza, Wickhams Cay I, 2nd Floor, Road Town, Tortola, British Virgin Islands;

“Constitutive Documents” in relation to any English company, means that company’s certificate of incorporation and memorandum and articles of association or, in relation to an English partnership, the partnership deed governing the internal management and constitution of that partnership and, in relation to any overseas incorporated body or, as the case may be, an overseas partnership or other unincorporated entity, means the documents having equivalent status and effect in the relevant jurisdiction in each case;

“Construction Contract” means the contract for the upgrade of the Olinda Star mobile offshore drilling unit entered into by and between the Borrower and the Builder dated 3 August 2007;

“Construction Facility Limit” means an amount of two hundred and fifteen million Dollars ($215,000,000), as the same may be reduced pursuant to any provision of this Agreement;

“Continuing Representations” means clauses 7.1, 7.2, 7.3, 7.4, 7.6, 7.7, 7.11.6, 7.12.5, 7.12.6, 7.15.2, 7.16.2, 7.17.1, 7.18, 7.19, 7.21, 7.24, 7.26, 7.27, 7.31 and 7.32 of the Deed of Undertaking;

“Contractor Event” means, in each case in the reasonable opinion of the Facility Agent:

 

  (a) a failure, delay or other default:

 

  (i) by the Borrower in the performance of its obligations under any of clauses 2.1, 4.1, 4.3, 5.5, 5.6, 7.2, 8.1, 9, 12, 16, 17, 18.3, 22.2 and 22.3 of the Bareboat Charter; or

 

  (ii) by the Head Charterer in the performance of its obligations under the Charter;

 

  (iii) under, or termination of, the Services Agreement caused by the Head Charterer or the Sponsor, which, in any such case, results in a reduction in or cessation of payment of the Charter Rate; or

 

8

  (b) any damage to the Rig occurs:

 

  (i) resulting in a claim under the Insurances relating to hull and machinery and such damage results in a suspension of operation of the Rig as required under the Charter and a reduction in or cessation of payment of Charter Rate for a period in excess of ninety (90) consecutive days; and

 

  (ii) at a time when no Loss of Earnings Insurance is in effect and the amount standing to the credit of the Debt Service Reserve Account is less than double the Minimum Debt Service Reserve Amount at that time;

“Contribution” means, in relation to a Lender, the principal amount of the Loan owing to that Lender at any relevant time;

“Core Company” and “Core Companies” have the meanings given to those terms in clause 14.2.19(c) of the Deed of Proceeds and Priorities;

“Date of Yard Acceptance” means the date on which the Borrower accepts the Rig in accordance with the Construction Contract provided the Borrower has performed its obligations under clause 10.3.16;

“Debt Service Amount” means, in relation to any period and any date, the amount in Dollars which is equal to the sum of:

 

  (a) all amounts of principal and interest which will fall due for payment by the Borrower under clauses 5.1 and 6.1 save that, in relation to the last Application Date, the Required Amount shall be deemed to be reduced by the amount of the Final Payment; plus

 

  (b) all amounts of Swap Payments which will fall due for payment by the Borrower; minus

 

  (c) all amounts of Swap Receipts which will be received by the Borrower,

in each case, during that period and commencing on that date;

“Debt Service Letter of Credit” means any irrevocable and unconditional first demand letter of credit or bank guarantee provided pursuant to clause 9.1.1 of the Deed of Undertaking which is:

 

  (a) issued by a bank acceptable to the Facility Agent and rated at least BBB, in the case of any bank based outside of Brazil or BB, in the case of any bank based within Brazil, in each case by Standard & Poors or the equivalent thereof in the case of any other ratings agency;

 

  (b) issued to the Security Trustee;

 

  (c) available for drawing in circumstances where the amounts standing to the credit of the Debt Service Reserve Account may be applied in accordance with the Facility Documents; and

 

  (d) substantially in the form and on the terms set out in Schedule 2 to the Deed of Undertaking or in such other form or on such other terms as are approved by the Security Trustee;

“Debt Service Reserve Account” means the interest bearing Dollar account in the name of the Borrower with the Account Bank, as more specifically described in the Accounts Pledge, and includes any redesignation and sub-accounts thereof and includes any amount at the relevant time available for drawing under the Debt Service Letter of Credit;

 

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“Debt Service Reserve Account Receivables” means

 

  (a) the Minimum Debt Service Reserve Amount;

 

  (b) the amounts referred to in clauses 5.2.9 and 5.2.10 of the Deed of Proceeds and Priorities, and

 

  (c) all amounts from time to time drawn by the Security Trustee under any Debt Service Letter of Credit;

“Debt Service Reserve Shortfall” means, at any time, the amount (if any) by which:

 

  (a) the Minimum Debt Service Reserve Amount at that time; exceeds

 

  (b) the amount standing to the credit of the Debt Service Reserve Account at that time;

“Debt Service Undertaking” means the joint and several undertaking on the part of the Sponsor and Constellation contained in clause 9.3 of the Deed of Undertaking;

“Debt Service Undertaking Release Date” means the earliest of:

 

  (a) the date upon which the Charter has been successfully terminated by the Head Charterer or pursuant to an order of a Brazilian court on terms which impose no liability, obligation or condition on any Beneficiary, and the Rig has been removed from Brazilian waters to a location approved by the Security Trustee;

 

  (b) the date upon which the Charterer has duly executed the Charter Acknowledgement and the Lenders have received an opinion of Brazilian counsel in relation thereto and the Charterer in form and substance satisfactory to the Facility Agent, acting on the instructions of all the Lenders; and

 

  (c) the end of the Security Period;

“Deed of Proceeds and Priorities” or “DPP” means the deed of proceeds, priorities, undertakings and subordination entered into or to be entered into between the Beneficiaries, the Hedging Provider, the Account Bank, the Borrower and the Head Charterer, in the Agreed Form;

“Deed of Undertaking” means the deed of undertaking entered into or to be entered into between the Facility Agent, the Security Trustee, the Sponsor, Constellation, the Borrower and the Head Charterer in the Agreed Form;

“Default” means any Event of Default or any event or circumstance which is, with the giving of a notice by the Facility Agent and/or the expiry of the relevant period and/or the fulfilment of any other condition (in each case as specified in clause 11.1), likely in the opinion of the Facility Agent (acting in accordance with the instructions of the Majority Lenders, acting reasonably) to become an Event of Default;

“Default Rate” means the interest rate specified in clause 5.3.2 or, as the case may be, clause 5.3.3;

“Delivery Documents” means the Delivery Certificate referred to in Clause 12.6 of and Exhibit IV to the Construction Contract;

“Derivatives Contract” means a contract, agreement or transaction which is:

 

  (a) a rate swap, basis swap, commodity swap, forward rate transaction, commodity option, equity (or equity or other index) swap or option, bond option, interest rate option, foreign exchange transaction, cap, collar or floor, currency swap, currency option or any other similar transaction; and/or

 

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  (b) any combination of such transactions,

in each case, whether on-exchange or otherwise;

“Determination Notice” shall have the meaning given to that term in clause 5.6.1;

“Distribution” means any payment by or distribution of assets by the Head Charterer or the Borrower, whether in cash, property securities or otherwise;

“Dollars” and “$” mean the lawful currency of the United States of America and in respect of all payments to be made under this Agreement and the other Transaction Documents in Dollars mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

“Drawdown Date” means, in relation to each Advance, the date, being a Banking Day within the Availability Period relating to that Advance or, as the case may be, the Facility, on which that Advance is, or is to be, drawn down or made (or deemed to be drawn down or made) pursuant to clause 4 (Advances);

“Drawdown Notice” means a notice in the form or substantially in the form of Schedule 2, duly completed with particulars of the relevant Advance;

“Due Amounts” means, in relation to any Application Date, any of the amounts referred to in clauses 5.2.2 to 5.2.7 (inclusive) of the Deed of Proceeds and Priorities which fall due for payment on or before that Application Date and which remain unpaid in full as at that Application Date;

“Earnings” means all moneys whatsoever from time to time due or payable to the Borrower or the Head Charterer during the Security Period arising out of the use or operation of the Rig including (but without limiting the generality of the foregoing) all Charter Rate, Bareboat Hire Rate, Mobilisation Fees, freight, hire and passage moneys, moneys arising under any charter contract, bareboat charter or other agreement with any operator, income, income arising under pooling arrangements, any Loss of Earnings Proceeds, compensation payable to the Borrower or the Head Charterer in the event of requisition of the Rig for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination including, without limitation, any amounts payable by way of standby rate as more particularly described in Ref 104 of Attachment II to the Charter) of any charterparty or other contract for the employment of the Rig and including any repair rate, rate additional and moving rate as more particularly described in Attachment II to the Charter but excluding, for the avoidance of doubt, the Operations Rates;

“Earnings Account” means the interest bearing Dollar Account in the joint names of the Borrower and the Head Charterer opened or, as the context may require, to be opened by the Head Charterer with the Account Bank, designated “Earnings Account”, with account number 00.00.00.000 and includes any redesignation and sub-accounts thereof;

“Earnings Account Receivables” means:

 

  (a) all Earnings received after the Initial Charter Hire Date;

 

  (b) all Swap Receipts or Hedging Receipts payable under the Hedging Agreements,

 

  (c) all Loss of Earnings Proceeds (if any);

 

  (d) all Pre-Completion Guarantee Proceeds; and

 

  (e) all other amounts which are from time to time required, pursuant to the terms of any Facility Document, to be deposited in the Earnings Account;

 

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“Economic Inequality Provisions” means Articles 477-480 of the Brazilian Civil Code;

“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment by way of security, trust arrangement for the purpose of providing security or other security interest of any kind securing any obligation of any person or any other arrangement having the effect of conferring rights of retention or set-off (but excluding any right of set-off arising in favour of a banker prior to such right becoming exercisable) or other disposal rights over an asset (including without limitation title transfer and/or retention arrangements having a similar effect) and includes any agreement to create any of the foregoing but does not include liens arising in the ordinary course of trading by operation of law and not by way of contract;

“Environment” means all or any of the following media: air (including air within buildings or other structures and whether below or above ground); land (including buildings and any other structures or erections in, on or under it and any soil and anything below the surface of the land); land covered with water; and water (including sea, ground and surface water and any living organism supported by such media);

“Environmental Claim” means any claim, notice, prosecution, demand, action, official warning, abatement or other order (conditional or otherwise) relating to Environmental Matters or in response to a Spill or any notification or order requiring compliance with the terms of any Environmental Licence or Environmental Law;

“Environmental Law” includes all or any applicable law, statute, rule, regulation, treaty, by-law, code of practice, order, notice, demand, decision of the courts or of any governmental authority or agency or any other regulatory or other body in any jurisdiction relating to Environmental Matters, or relating to any environmental, social, labour, health and safety or security risks;

“Environmental Licence” includes any applicable permit, licence, authorisation, consent or other approval required at any time by any Environmental Law;

“Environmental Matters” includes (a) the generation, deposit, disposal, keeping, treatment, transportation, transmission, handling, importation, exportation, processing, collection, sorting, presence or manufacture of any waste (as defined in the Environmental Protection Act 1990) of any Relevant Substance; (b) nuisance, noise, defective premises, health and safety at work or elsewhere; and (c) the pollution, conservation or protection of the Environment (both natural and built) or of man or any living organisms supported by the Environment or any other matter whatsoever affecting the Environment or any part of it;

“Equity” means funding provided by way of (a) the investment of ordinary share capital premium in the recipient of that funding, or (b) debt funding, in each case where (A) the obligations of the recipient in relation to such funding are fully and effectively subordinated to all obligations of the recipient under the Facility Documents, and (B) the rights of the provider of that funding are fully and effectively subordinated to all the rights of the Beneficiaries under the Facility Documents;

“EU Institution” means (whether having a distinct legal personality or not) the organs of the European Union having power to issue binding laws, regulations, directives, decisions, regulatory requirements, judgments, orders or directions including, without limitation, the European Commission, the European Council, the European Court of Justice and the European Parliament;

“Euro” and “€” means the lawful currency of the Euro Zone;

“Euro Zone” means the territory under the control of the following states: Austria, Belgium, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain and any other state that at any time adopts the Euro as its official currency;

“Event of Default” means any of the events or circumstances described in clause 11.1 (Events of Default);

 

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“Exchange Rate” means, as the context requires:

 

  (a) in relation to any amount which is to be converted into, or out of, Dollars on any date, the spot rate of exchange at which the Facility Agent could in the ordinary course of business purchase or, as the case may be, sell Dollars with or, as the case may be, for that amount in the London foreign exchange market at or about 11.00 a.m. on that date for delivery two (2) Banking Days after that date; or

 

  (b) in relation to any amount which is to be converted into, or out of, Euros on any date, the European Central Bank spot rate of exchange for the purchase or, as the case may be, sale of Euros with, or for, that amount as fixed by the European Central Bank at, or about, 14:15 on the date which is one (1) Banking Day prior to the date on which the rate is to be set;

“Exemption from Payment Event” means any event described in paragraph 2.1 of Attachment II to the Charter which entitles the Charterer to cease payment of the Charter Rate for the periods set out in such paragraph;

“Existing Project Cost Over Run” means, at any time, the amount by which the Project Cost at that time paid or incurred exceeds the Project Cost which was budgeted to have been paid or incurred at that time in the Budget referred to in paragraph (a) of the definition of Budget;

“Expenses” means:

 

  (a) all Losses suffered, incurred or paid by any Beneficiary or any Insolvency Official after notice thereof to the Borrower or at any time an Event of Default has occurred and is continuing in connection with the exercise of the rights, remedies and powers granted by, referred to in, or otherwise contemplated by the Facility Documents; and

 

  (b) interest on those Losses at the Default Rate, from the date of demand by the relevant Beneficiary or Insolvency Official to the date of payment (after as well as before judgment);

“Facility” means the loan facility available to the Borrower pursuant to this Agreement;

“Facility Agent” means ING Bank N.V. of Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx or such other person as may be appointed agent for the Lenders pursuant to clause 16.15.1 (Retirement of Agents), and includes its successors in title;

“Facility Documents” means this Agreement, the Fee Letters, the Security Documents and the Hedging Agreements;

“Facility Limit” means an amount of three hundred and ten million Dollars ($310,000,000) as the same may be reduced in accordance with any provision of this Agreement;

“Facility Obligations” means all monies, obligations and liabilities from time to time owing or payable, undertaken, incurred or assumed by the Borrower, to, or in favour of, the Beneficiaries (or any of them), other than the Hedging Provider, under or pursuant to this Agreement and the other Facility Documents, disregarding for this purpose the provisions of clause 19 of this Agreement and clause 22 of the Deed of Proceeds and Priorities (and any analogous provision of any other Facility Document to which the Borrower is a party);

“Facility Office” means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five (5) Banking Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement;

“Fee Letters” means together the two letters dated on or about the date of this Agreement one being from ING Bank N.V., in its capacity as the Arranger, to Constellation, and the other from ING Bank N.V., in its capacities as the Agents, to the Borrower respectively, and countersigned

 

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by Constellation and the Borrower respectively by way of acceptance detailing, inter alia, the amounts of the fees payable in accordance with clause 7.1.1 (Fees), and “Fee Letter” means each or either of them (as the context may require);

“Final Disposition” means the sale of the Rig (or any part thereof) against payment in cash, whether through an agent on its behalf or otherwise, of all its rights, title and interest in and to the Rig (or the relevant part), on terms that such right, title and interest will only pass to the purchaser on payment in full of that cash;

“Final Disposition Proceeds” means the aggregate amount of:

 

  (a) all cash consideration received upon, or as a result of, the Final Disposition of the Rig, and

 

  (b) any non-refundable deposit paid by a person acquiring or proposing to acquire the Rig under a contract or offer to purchase, or otherwise acquire the Rig which has been withdrawn, terminated or cancelled or has lapsed;

“Final Maturity Date” means the date falling five (5) years after the earlier of (a) the Charter Date of Acceptance and (b) the last day of the Availability Period;

“Final Payment” means, in relation to the Facility or the Loan, fifty million Dollars ($50,000,000), as that amount may have been reduced by any term of the Facility Documents;

“Financial Covenant Measurement Date” means each 30 June and 31 December falling within the Security Period;

“Financial Covenants” means each of the financial covenants set out in clause 10 of the Deed of Undertaking;

“Financial Year” has the meaning given to it in clause 14.1 of the Deed of Proceeds and Priorities;

“First Advance” means the first Principal Advance drawn down or to be drawn down by the Borrower after the date of this Agreement in accordance with clauses 3 and 4;

“First Intercompany Hull Advance” means an Advance made pursuant to clause 4.1 and specified as the First Intercompany Hull Advance in the relevant Drawdown Notice;

“Fixed Rate” means, in relation to a Hedging Agreement, the fixed rate of interest by reference to which periodic payments and receipts to be made or received under that Hedging Agreement are calculated;

“Flag State” means Liberia or any other state or country in which the Rig, with the prior written consent of the Security Trustee (acting after consultation with, and on the instructions of, the Majority Lenders), is from time to time registered in accordance with the provisions of this Agreement, the General Assignment, the Sponsor Assignment and the other Transaction Documents;

“Force Majeure Event” means an event, occurrence or circumstance contemplated in (i) clause 13 of the Charter, or, as the context may require (ii) clause 13 of the Services Agreement which, with the lapse of time, gives rise to a right to terminate, rescind or cancel the Charter or, as the case may be, the Services Agreement;

“Force Majeure Termination Period” means the period of sixty (60) days following the occurrence of a Force Majeure Event;

“General Assignment” means the general assignment in the Agreed Form, executed or, as the context may require, to be executed by each of the Borrower and the Head Charterer in favour of the Security Trustee;

 

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“Government Entity” means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant;

“Group” means the Sponsor, Constellation, the Head Charterer, the Borrower and the BVI Companies;

“Group Owners” means the members of the Queiroz Galvão family as identified in the Group Structure Chart;

“Group Structure Chart” means the Parent Sponsor and Group structure chart set out in Schedule 9 of this Agreement;

“Guarantee Rights” means the rights of the Borrower under any guarantees and warranties issued by any counterparty to a Material Contract as more particularly described in Schedule 7;

“Guararapes” means Guararapes International Limited, a company incorporated under the laws of the British Virgin Islands with company number 491849 and with its registered office at Xxxxxxxxx Xxxxxxxx, X.X. Xxx 00, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx;

“Head Charterer” means London Tower International Drilling C.V., a limited partnership organised under the laws of The Netherlands represented by New Canyon City Inc., its managing partner, and having its registered office at WTC Xxxxxxxxx, Xxxxx X-00, Xxxxxxxxxxxxxx 0000, 1077 XX, Amsterdam, The Netherlands;

“Head Charterer General Partner” means New Canyon City Inc., a company incorporated under the laws of British Virgin Islands with company number 1445352 and with its registered office at Xxxxxxxxxx Plaza, Wickhams Cay I, Road Town, Tortola, British Virgin Islands;

“Head Charterer Limited Partner” means Constellation;

“Head Charterer Partnership Agreement” means the initial partnership agreement of the Head Charterer dated 6 December 2006 between Stichting Incorporador Management, as the original managing partner and Stichting Incorporador as the original limited partner, as amended by a deed entitled “Amended Deed of Limited Partnership” entered into or to be entered into between the Head Charterer General Partner and the Head Charterer Limited Partner;

“Head Charterer Partnership Pledge” means the pledge of the partnership interests in the Head Charterer executed or to be executed by the Head Charterer General Partner and the Head Charterer Limited Partner in favour of the Security Trustee in the Agreed Form;

“Hedging Agreements” means (a) the confirmation or confirmations (if any) of interest rate swap, and/or (b) the International SWAPS and Derivatives Association Master Agreement entered into or, as the context may require, to be entered into, in each case between the Hedging Provider as interest hedging provider and the Borrower as counterparty and includes any schedule to that Master Agreement and any confirmation issued under that Master Agreement, and includes any replacement or amendment thereof approved by the Lenders in accordance with clause 14.3.2 of the Deed of Proceeds and Priorities;

“Hedging Obligations” means, in relation to a Hedging Agreement, all moneys, obligations and liabilities from time to time owing or payable, undertaken or assumed by the Borrower to or in favour of the Hedging Provider under or pursuant to that Hedging Agreement and the Transaction Documents to which the Borrower is a party (or any of them) (for the avoidance of doubt, without prejudice to and after giving effect to any contractual set off and/or netting provisions contained in that Hedging Agreement);

“Hedging Provider” means ING Capital Markets LLC, a limited liability company incorporated in the United States of America under the laws of the state of Delaware having its principal place of business at 1325 Avenue of the Americas, Xxx Xxxx, XX 00000, Xxxxxx Xxxxxx of America, in its capacity as hedging provider, and includes its successors in title;

 

15

“Hedging Receipts” means, in relation to a Hedging Agreement, all amounts from time to time payable to the Borrower under and pursuant to that Hedging Agreement (for the avoidance of doubt, without prejudice to and after giving effect to any contractual set off and/or netting provisions contained in that Hedging Agreement), including all Swap Receipts;

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which the first is a Subsidiary;

“Hull” means the hull on which the completed Rig will be based, in the condition it was in prior to commencement of the Project;

“Hull Cost” means the total cost of the acquisition of the Hull being two hundred million Dollars ($200,000,000);

“Hull Facility Limit” means an amount of seventy three million Dollars ($73,000,000), as the same may be reduced pursuant to any provision of this Agreement;

“Hull Value” means the market value of the Hull determined by the average of three market valuations, one provided by each of Tecnitas do Brasil, Fearnley Offshore LLC and X.X. Xxxxxx USA;

“Incapacity” means, in relation to any person, any Insolvency Event, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of that partnership);

“Indebtedness” means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent;

“Indemnified Persons” shall have the meaning given to that term in clause 12.3 (General operating indemnity);

“Information Memorandum” means the Information Memorandum in the form authorised by Constellation and distributed by the Arranger at the request of the Sponsor and the Borrower in connection with the Project and the Project Documents;

“Initial Charter Hire Date” means the date upon which the first payment of Charter Rate is due and payable under the Charter;

“Initial Security Documents” means the Pre-Completion Guarantee, the General Assignment, the Sponsor Assignment, the Deed of Proceeds and Priorities, the Mortgage, the Builder Acknowledgement, the Deed of Undertaking, the Accounts Pledge, the Borrower Share Pledge, the Head Charterer Partnership Pledge, each Power of Attorney, the Letter of Authorisation, the Notices of Assignment and all other documents, notices and acknowledgements issued pursuant thereto or required thereby;

“Insolvency Event” means, in relation to any person, the occurrence of any of the following events:

 

  (a) Insolvency: that person is unable to pay its debts as they fall due or admits its inability to pay its debts as they mature or suspends or threatens to suspend making payment of all or a substantial part of its Indebtedness or makes a general assignment for the benefit of creditors or is subject to or applies for winding-up or liquidation proceedings or is successfully put into forced or voluntary liquidation (except for the purposes of a voluntary reorganisation not involving the insolvency of that person and previously agreed in writing by the Facility Agent acting in accordance with the instructions of the Majority Lenders); or

 

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  (b) Winding up: any order is made, petition is presented, resolution is passed or other act or action is taken for the winding-up, liquidation, administration or other formal insolvency of that person under any applicable law, whether now or hereafter in effect (save where the petition presented is frivolous or vexatious and is dismissed within a period of twenty two (22) Banking Days);

 

  (c) Appointment of receivers and managers: any administrative or other receiver is appointed of that person or any substantial part of its assets or any other steps (except for any frivolous or vexatious steps which are dismissed within a period of twenty two (22) Banking Days) are taken to enforce any Encumbrance over all or any material part of the assets of that person;

 

  (d) Seizure: all or a substantial part of the assets of that person are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity;

 

  (e) Analogous proceedings: there occurs, in relation to that person in any jurisdiction, any event which corresponds with, or has an effect equivalent or similar to, any of the events mentioned in the foregoing paragraphs;

“Insolvency Official” in respect of any person, means any liquidator, receiver, administrator and/or manager or administrative receiver, trustee or similar officer appointed in respect of that person, whether appointed by a creditor, pursuant to any statute, by a court or other tribunal or otherwise, for the purpose of recovering, realising, distributing or disposing of any of the assets or undertaking of that person;

“Insurance Consultant” means such suitably qualified person or persons from time to time appointed by the Facility Agent (following consultation with the Sponsor) to advise the Beneficiaries in connection with the Insurances;

“Insurance Proceeds” means the proceeds of any Insurances;

“Insurances” means all policies and contracts of insurance (which expression includes all entries of the Rig in a protection and indemnity or war risks association and any business interruption or loss of earnings insurance in respect of the Charter Rate and any confiscation and expropriation insurance (whether such risks are covered by the entry of the Rig in a war risks association or by way of separate policies)) which are from time to time in place or taken out or entered into in respect of the Rig or her earnings (but excluding any policies and contracts of insurance taken out or entered into by the Security Trustee or by any of the Beneficiaries for the sole benefit of the Beneficiaries) or otherwise howsoever in connection with the Rig and all benefits thereof (including claims of whatsoever nature and return of premiums), including, without limitation, the insurances more particularly described in clause 9 of the General Assignment;

“Intellectual Property” means:

 

  (a) any patents, trade marks, service marks, designs, business names, copyrights, design rights, moral rights, inventions, confidential information, know-how and other intellectual property rights and interests, whether registered or unregistered; and

 

  (b) the benefit of all applications and rights to use such assets of each Security Party;

“Intercompany Construction Interest Advance” means an Advance made pursuant to clause 4.1 and specified as the Intercompany Construction Interest Advance in the relevant Drawdown Notice;

“Intercompany Construction Loan” means the aggregate principal amount advanced to the Borrower pursuant to the Intercompany Construction Loan Agreement;

“Intercompany Construction Loan Agreement” means the loan agreement dated 7 September 2006 made between Constellation and the Borrower (then known as Tessone Ventures S.A.) pursuant to which Constellation agreed to advance certain amounts to the Borrower in order to finance part of the Project Cost;

 

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“Intercompany Construction Loan Repayment Date” means the date upon which the Principal Construction Balance becomes repayable, as evidenced to the satisfaction of the Facility Agent;

“Intercompany Construction Principal Advance” means an Advance made pursuant to clause 4.1 and specified as the Intercompany Construction Principal Advance in the relevant Drawdown Notice;

“Intercompany Hull Loan” means the aggregate principal amount advanced to the Borrower pursuant to the Intercompany Hull Loan Agreement;

“Intercompany Hull Loan Agreement” means the loan agreement dated 7 September 2006 made between Constellation and the Borrower (then known as Tessone Ventures S.A.) pursuant to which Constellation has advanced certain amounts to the Borrower in order to finance the Hull Cost;

“Intercompany Loan Agreements” means together the Intercompany Hull Loan Agreement and the Intercompany Construction Loan Agreement;

“Intercompany Principal Advances” means together the First Intercompany Hull Advance, the Second Intercompany Hull Advance and the Intercompany Construction Principal Advance;

“Interest Advance” means each Advance in respect of interest and/or Commitment Fee (in each case, payable pursuant to this Agreement) as permitted in accordance with, and deemed made pursuant to, clause 4.2;

“Interest Facility Limit” means an amount of twenty two million Dollars ($22,000,000), as the same may be reduced in accordance with any provision of this Agreement;

“Interest Payment Date” means the last day of an Interest Period;

“Interest Period” in relation to any Advance or the Loan, means each period for the calculation of interest in respect of that Advance or the Loan ascertained in accordance with clause 5.2;

“Interim Payment” means any payment made by Constellation after the date of this Agreement of any Project Cost, as evidenced to the satisfaction of the Facility Agent;

“ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18) of the International Maritime Organisation and incorporated into the Safety of Life at Sea Convention, and includes any amendment of the foregoing and any regulation issued pursuant to the foregoing;

“ISPS Code” means the International Ship and Port Facility Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulation issued pursuant thereto;

“ISS Certificate” means, if and whenever the same is required by applicable law and/or pursuant to or for the purposes of the Insurances, the International Ship Security Certificate for the Rig issued in accordance with the ISPS Code;

“Legal Reservations” means:

 

  (a) the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors; and

 

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  (b) any other matters which are set out as qualifications or reservations as to matters of law of general application in any of the legal opinions provided pursuant to clause 3;

“Lenders” means together:

 

  (a) as of the date of this Agreement, the banks and financial institutions listed in Schedule 1 of this Agreement;

 

  (b) any Transferee of any of the banks and financial institutions referred to in (a) above (in accordance with clause 15.3 (Transfer) of this Agreement); and

 

  (c) any Transferee of any such Transferee referred to in (b) above,

and in each case includes their successors in title;

“Letter of Authorisation” means a letter from the Charterer addressed to the Security Trustee whereby the Charterer consents to the assignment of all amounts payable by the Charterer under the Charter, in the Agreed Form;

“Liability Insurance Proceeds” means the proceeds of the Insurances received in respect of protection and indemnity risks;

“LIBOR” means, in relation to a particular period:

 

  (a) the offered rate for deposits of the relevant currency for a period approximately equivalent to such a period at or about 11.00 a.m. (London time) on the second Quotation Day before the first day of such period as displayed on Reuters page LIBOR01 (British Bankers’ Association Interest Settlement Rates) (or such other page as may replace such page LIBOR01 on such system or on any other system of the information vendor for the time being designated by the British Bankers’ Association to calculate the British Bankers’ Association Interest Settlement Rate (as defined in the British Bankers’ Association Recommended Terms and Conditions dated August, 1985)); or

 

  (b) if on such date no such rate as is mentioned in paragraph (a) above is displayed, LIBOR for such period shall be the arithmetic mean (expressed as a percentage rounded upwards, if necessary, to five decimal places) of the rates respectively quoted to the Facility Agent by each of the Reference Banks at the request of the Facility Agent (or, if not all the Reference Banks provide a quotation when requested, the arithmetic mean of the rates which are quoted) as such Reference Bank’s offered rate for deposits of the relevant currency in an amount approximately equal to the amount in respect of which LIBOR is to be determined for a period approximately equivalent to such period to prime banks in the London Interbank Market at or about 11.00 a.m. (London time) on the second Quotation Day before the first day of such period;

“Liquidated Damages” means any monies payable or paid under or pursuant to the Construction Contract or a Material Contract in relation to or as compensation for any delay or failure in performance by any Project Counterparty;

“Loan” at any time, means the aggregate of the Advances drawn down or made or deemed to be drawn down or made under this Agreement which remain outstanding at that time;

“Loss of Earnings Insurances” means the insurance (if any) effected by or on behalf of the Head Charterer in relation to any loss of earnings or business interruption in respect of the Rig and/or the Charter which insurance shall:

 

  (a) at all times be for a period of at least two hundred and seventy (270) days in each year;

 

  (b) be subject to a waiting period of not more than ninety (90) days;

 

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  (c) be for an amount which is sufficient to discharge in full all interest payable hereunder in respect of the Loan during the period for which amounts are payable under such insurance; and

 

  (d) otherwise comply with the requirements of clause 9 of the General Assignment;

“Loss of Earnings Proceeds” means all of the proceeds of and all other moneys received under or in respect of any Loss of Earnings Insurances;

“Loss Payable Clause” means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clause to be in the form set out in Schedule 2 to the General Assignment or in such other form as may from time to time be reasonably required by the Security Trustee acting on the instructions of the Majority Lenders;

“Losses” means all losses, liabilities, costs, charges, expenses, damages and outgoings of whatsoever nature (including without limitation, Taxes (but excluding taxes levied on the overall income or profits of any Beneficiary in the jurisdiction in which its principal or Facility Office under this Agreement is located), stamp duties and other duties or charges, registration fees, repair costs, insurance premiums, fees of insurance advisors and technical consultants, printing costs, out-of-pocket expenses and fees and disbursements of legal counsel, together with any value added or similar tax payable in respect thereof);

“Majority Lenders” means at any relevant time (a) Lenders the aggregate of whose Contributions equal or exceed sixty-six and two-thirds per cent. (66.66%) of the Loan at that time or (b) if no Advance has been made, Lenders the aggregate of whose Commitments at that time equal or exceed sixty-six and two-thirds per cent. (66.66%) of the Total Commitments at that time or, if all of the Commitments have been reduced to zero at or prior to that time, Lenders the aggregate of whose Commitments immediately prior to that reduction equalled or exceeded sixty-six and two-thirds per cent. (66.66%) of the Total Commitments as at that time;

“Management Agreement” means the management agreement entered, or to be entered into, between the Manager, as manager and the Borrower whereby the Borrower appoints the Manager as its manager of the Project in the Agreed Form;

“Management Fees” means the amount of fees payable by the Borrower or in relation to the Project pursuant to the Management Agreement;

“Manager” means Constellation Services Ltd. (formerly Tabarelli Equities S.A.), a company incorporated under the laws of the British Virgin Islands, with company number 1028854, and with its principal office at Xxxxxxxxxx Plaza, Wickhams Cay I, 2nd Floor, Road Town, Tortola, British Virgin Islands, or any other wholly owned Subsidiary of Constellation approved by the Facility Agent;

“Mandatory Cost” means the percentage rate per annum calculated by the Facility Agent in accordance with Schedule 8 to this Agreement;

“Manuals and Technical Records” means all books, records, logs, manuals, handbooks, technical data, plans, drawings and other materials and documents (whether or not kept or required to be kept in compliance with any applicable laws or the requirements of the Classification Society) relating to the Rig;

 

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“Margin” means:

 

  (a) one point five five percent. (1.55%) per annum up to the Margin Reduction Date;

 

  (b) thereafter zero point nine five per cent. (0.95%) per annum;

“Margin Reduction Date” means the date on which each of the conditions specified in paragraph 10 of Part 4 of Schedule 3 and paragraphs 2, 5, 7(a), 7(b), 7(c) and 11 of Part 5 of Schedule 3 have been satisfied in full;

“Material Adverse Effect” means any event or circumstance (or combination of events or circumstances) the effect of which is or could reasonably be expected to be materially adverse to:

 

  (a) the ability of any Security Party to perform any of its material obligations under or otherwise to comply with the terms of the Transaction Documents at the time and in the manner stipulated therein; or

 

  (b) the validity or enforceability of, or the effectiveness or ranking of any security granted or purporting to be granted pursuant to any of, the Facility Documents or the rights or remedies of any Beneficiary under any of the Facility Documents;

“Material Contract” means any contract, agreement or arrangement entered into or to be entered into in relation to the Project which contract, agreement or arrangement has a value in excess of five million Dollars ($5,000,000) and includes (without limitation) the Construction Contract;

“Measurement Period” for the purposes of any Bulletin of Measurement means each consecutive period commencing upon the twenty sixth day of a month up to and including the twenty fifth day of the following month;

“Minimum Debt Service Reserve Amount” means, at any time, an amount equal to the Debt Service Amount for the period of three (3) months commencing at that time;

“Mobilisation Costs” means any of the costs referred to in Clause 5 of the Charter which are actually incurred by (including any amount invoiced to) the Head Charterer but shall exclude, for the avoidance of doubt, any Transportation Costs;

“Mobilisation Fees” means any amount actually received by the Head Charterer in respect of the Mobilisation Costs, as contemplated by clause 5.1.1 and Ref. 106 (UNIT Mobilization) of Attachment II of the Charter;

“month” means a period beginning in one calendar month and ending in the relevant later calendar month on the day numerically corresponding to the day of the calendar month in which it started, provided that (i) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such later calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in such later calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage” means the first priority mortgage over the Rig executed or to be executed by the Borrower in favour of the Security Trustee and registered or to be registered against the Rig in accordance with all applicable law in the Flag State and in Brazil;

“NCC” means the Netherlands Civil Code (Burgerlijk Wetboek);

“Non-Payment Event” means that the Charterer fails to pay the Charter Rate in full under the Charter when due other than where the reduced or suspended payment of the Charter Rate arises as a result of:

 

  (a) deductions permitted by the Charter as a consequence of the occurrence of a Force Majeure Event;

 

21

  (b) deductions permitted by the Charter as a consequence of the occurrence of a Charter Rate Reduction Event or Exemption from Payment Event (whether or not the amount of such deduction is disputed);

 

  (c) deductions which are made by the Charterer following the occurrence of an event or circumstance alleged by the Charterer to be a Charter Rate Reduction Event, Exemption from Payment Event or a Force Majeure Event where the classification of that event or circumstance as a Charter Rate Reduction Event, an Exemption from Payment Event or a Force Majeure Event is disputed by the Head Charterer; and

 

  (d) other deductions made by the Charterer which are disputed by the Head Charterer as not being validly or properly made or which the Head Charterer contends are not permitted by the Charter,

provided that in order for such disputed deductions referred to in (c) or (d) above to be disregarded for the purpose of establishing whether a Non-Payment Event has occurred, the Facility Agent (acting after consultation with, and on the instructions of, the Majority Lenders in their absolute discretion) must be satisfied that such disputed deductions (i) are not material or (ii) are not applied or levied on a consistent basis by the Charterer or (iii) are based on reasonable commercial practices (having due regard to the terms of the Charter);

“Notice of Assignment” means, as the context may require, a notice of assignment in the form set out in the relevant Part of Schedule 1 to the General Assignment or the Sponsor Assignment or a notice of assignment in such form and terms as the Facility Agent may reasonably require (which may incorporate an acknowledgement thereof);

“Off Hire Allowance” means:

 

  (a) the period of five (5) days in each contractual year during which Charter Rate (at the standby rate) shall be paid notwithstanding any interruption in the operation of the Rig which occurs as a consequence of the docking of the Rig as described in paragraph 3 of Attachment II to the Charter; or

 

  (b) the period of thirty (30) minutes in each day during which Charter Rate (at the standby rate) shall be paid notwithstanding any interruption in the operation of the Rig which occurs as a consequence of the lubrication of the Rig as described in paragraph 4 of Attachment II to the Charter;

“OIM” means the offshore installation manager of the Rig;

“Operating Costs Allowance” means the amount equal to 8.5% of the Charter Rate from time to time;

“Operating Services Agreement” means the agreement entered into, or to be entered into, by the Sponsor and the Manager whereby the Manager agrees to provide some or all of the services referred to in the Sub-Contract Agreement;

“Operational Covenants” means:

 

  (a) clause 10.2.2 (Authorisations), clause 10.2.6 (Action of the Borrower) and clause 10.2.7 (Compliance with laws and regulations);

 

  (b) clause 14.2.2 (Authorisations and Licences), clause 14.2.5 (Information concerning the Project), clause 14.2.7 (Action of the DPP Parties), clause 14.2.8 (Compliance with laws and regulations), clause 14.2.18 (Project Manager), clause 14.2.20 (Further Assurance), clause 14.2.22 (Security Rights), clause 14.2.23 (Enforcement of Security), clause 14.2.24 (Operator) and clause 14.4 (Technical Adviser) of the Deed of Proceeds and Priorities;

 

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  (c) clause 8.2.2 (Authorisations and Licences), clause 8.2.4 (Information concerning the Project), clause 8.2.6 (Action of the Undertaking Parties), clause 8.2.7 (Compliance with laws and regulations), clause 8.2.15 (Project Manager), clause 8.2.17 (Further Assurance), clause 8.2.19 (Security Rights), clause 8.2.20 (Enforcement of Security), clause 8.2.21 (the Operator) and clause 11 of the Deed of Undertaking;

 

  (d) clause 5.1.9, clause 5.1.10, clause 5.1.13, clause 5.1.15, clause 7 (Covenants in relation to the Rig and Charter) and clause 9 (Insurance Provisions) of the General Assignment; and

 

  (e) clause 5.1.7, clause 5.1.8 and clause 5.1.11 of the Sponsor Assignment;

“Operations Rate” means the full amount of the daily rate and any other amounts payable under the Services Agreement in Brazilian Reals;

“Original Financial Statements” means:

 

  (a) in relation to the Sponsor and Constellation, its consolidated audited financial statements for its Financial Year ended 31 December, 2006; and

 

  (b) in relation to the Borrower and the Head Charterer, its audited financial statements for its Financial Year ended 31 December, 2006;

“Original Schedule of Minimum Repayment Amounts” means Schedule 6 of this Agreement;

“Parent Guarantee” means the corporate guarantee issued by the Parent Guarantor in favour of the Borrower pursuant to the Construction Contract;

“Parent Guarantor” means Jurong Shipyard Inca;

“Parent Sponsor” means Queiroz Xxxxxx X.X., a company organised under the laws of Brazil, with its registered office at Xx Xxx Xxxxxx, 000, xxxx 0000-xxxx, Xxx xx Xxxxxxx, XX;

“Participating Member State” means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union;

“Partners” means together the Head Charterer General Partner and the Head Charterer Limited Partner;

“Performance Period” means the period of twelve (12) months commencing on the Charter Date of Acceptance provided that if, during that twelve (12) month period (“Initial Period”) the Head Charterer, the Borrower, the Sponsor and/or the Rig has not performed as contemplated in clause 9.2.1(a) or (b) of the Deed of Undertaking, as the case may be, the Performance Period shall terminate on the later to occur of the date of expiry of that Initial Period and the date on which each of the following conditions are satisfied: (i) during the period of forty five (45) days ending on that date, the amount of Charter Rate being paid daily by the Charterer was, on average, not less than ninety five per cent. (95%) of the full Charter Rate provided that, for the purposes of calculating that forty five (45) day period and that ninety five per cent. (95%) figure, any day on which the provisions of Ref 104 (Standby Rate) or Ref 105 (Moving Rate) of Attachment II of the Charter are applicable shall be ignored, and provided further that, in relation to the calculation of the ninety five per cent. (95%) figure, any payment made pursuant to the provisions of Ref 103 (Rate Additional) of Attachment II of the Charter shall be taken into account; and (ii) during the period of forty five (45) days referred to in sub-paragraph (i), the Rig was being continuously operated pursuant to the Charter at the direction of the Charterer;

 

23

“Period of Off Hire” means any period during which an Exemption from Payment Event under the Charter has occurred and is continuing;

“Permitted Amendment” means:

 

  (a) any amendment to the Project Documents or any of them by way of change order or written amendment which relates to matters of a purely technical and/or operational nature and which would not, or would not reasonably be expected to:

 

  (i) require the Borrower or any other Security Party to effect or otherwise result in a material structural alteration to the Rig or affect the safety or structural integrity thereof;

 

  (ii) result in any change in the amount, calculation, method or timing of payment of the Charter Rate and any rate addition or performance bonus or fines relating to the Rig or Management Fees;

 

  (iii) result in any change in the method of the measurement of the performance by the Rig, the Borrower and/or the Head Charterer;

 

  (iv) result in any increase in the total aggregate amount payable under any Project Document by more than the lower of twelve million five hundred thousand Dollars ($12,500,000) and ten per cent. (10%) of that total aggregate amount and/or result in any total aggregate delay in the expected Date of Yard Acceptance or Charter Date of Acceptance in excess of forty five (45) days or delay the expected Charter Date of Acceptance beyond 11 June 2009;

 

  (v) result in any change to the termination provisions thereof;

 

  (vi) result in any change to the definition of force majeure or the application of the force majeure provisions therein;

 

  (vii) result in an extension of the period during which the Borrower or any other Security Party has obligations thereunder and/or the date by which the relevant Project Counterparty is obliged to have performed any of its obligations thereunder;

 

  (viii) result in any change to the insurance requirements thereof or the introduction of new insurance limits or requirements therein;

 

  (b) any waiver or consent under or in respect of the documents comprising the Rig Rights which would not adversely affect (i) the amount or timing of receipt of any proceeds in respect of the Rig Rights or (ii) the rights or interests of the Beneficiaries or any of them therein;

 

  (c) any amendment permitted under clause 14.3.2 of the Deed of Proceeds and Priorities; (d) any extension of the term of the Charter;

“Permitted Encumbrance” means:

 

  (a) any Encumbrance in favour of the Security Trustee and/or any of the Beneficiaries created pursuant to the Security Documents;

 

  (b) any lien arising in the ordinary course of business or operation of the Rig by statute or by operation of law in respect of obligations which are not overdue or which are being contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been provided) so long as any such proceedings or the continued existence of such lien do not in the opinion of the Facility Agent involve any likelihood of the sale, forfeiture or loss of, or of any interest in, the Rig or any Total Loss Proceeds;

 

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  (c) any Encumbrance arising out of any claims, judgments, or awards against a Security Party which are being contested in good faith by that Security Party or which are the subject of a pending appeal (and for the payment of which adequate reserves have been provided) so long as any such claims, judgments or awards or the continued existence of such Encumbrance do not in the reasonable opinion of the Facility Agent involve any likelihood of the sale, forfeiture or loss of, or of any interest in, the Rig or any Total Loss Proceeds; and

 

  (d) Permitted Liens;

“Permitted Interest Payments” means any payments which the Borrower is required to make to the Hedging Provider pursuant to the terms of the Hedging Agreements (subject always to any terms thereof permitting the netting, between the Borrower and the Hedging Provider, of amounts based upon, on the one hand, a floating interest rate and, on the other hand, the Fixed Rate) (each a “Permitted Interest Payment”);

“Permitted Liens” means:

 

  (a) any repairer’s or outfitter’s possessory lien for a sum in aggregate at any time not (except with the prior written consent of the Facility Agent) exceeding fifteen million Dollars ($15,000,000) and, during the period until the date on which the Rig is delivered to the Borrower by the Builder under the Construction Contract, shall include (i) any possessory lien of the Builder (or either of them), and (ii) any contractual title retention arrangement pursuant to any contract, agreement or arrangement entered into in relation to the Project which is not a Material Contract;

 

  (b) any lien on the Rig for master’s, OIM’s, officer’s or crew’s wages arising in accordance with usual maritime practice which are not overdue; and

 

  (c) any lien for salvage;

“Place of Construction” means latitude: 22°52.478 S and longitude: 043°07.780 W;

“Port of Registry” means the port in the Flag State where the Rig is from time to time registered;

“Power of Attorney” means each security power of attorney granted by the Borrower or the Head Charterer to the Security Trustee (on behalf of the Beneficiaries), pursuant to which each of the Borrower and the Head Charterer appoints or, as the context may require, will appoint the Security Trustee as its attorney for the purposes of, inter alia, effecting the termination of the Charter and the repossession of the Rig, in the Agreed Form;

“Pre-Completion Guarantee” means the guarantee and indemnity in the Agreed Form granted or, as the context may require, to be granted jointly and severally by the Sponsor and Constellation in favour of the Security Trustee and shall include the Pre-Completion Guarantee Supplement if and when executed by the Parties thereto;

“Pre-Completion Guarantee Proceeds” means any proceeds of the Pre-Completion Guarantee;

“Pre-Completion Guarantee Release Date” means the date upon which the Pre-Completion Guarantee is released and discharged unconditionally by the Security Trustee in accordance with clause 2.13 of the Pre-Completion Guarantee;

“Pre-Completion Guarantee Supplement” means the supplement to the Pre-Completion Guarantee entered into or, as the context may require, to be entered into by the Sponsor, Constellation, the Security Trustee and the Facility Agent in the form of Schedule 12, or such other form as the Facility Agent shall agree;

 

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“Principal Advances” means the First Intercompany Hull Advance, the Second Intercompany Hull Advance, the Intercompany Construction Principal Advance and each Principal Construction Advance (each a “Principal Advance”);

“Principal Construction Advance” means an Advance made pursuant to clause 4.1 and specified as a Principal Construction Advance in the relevant Drawdown Notice;

“Principal Construction Balance” means the principal outstanding under the Intercompany Construction Loan as of the date of the Drawdown Notice for the First Advance, as evidenced to and agreed by the Facility Agent;

“Principal Facility Limit” means the aggregate of the Hull Facility Limit and the Construction Facility Limit;

“Principal Hull Balance” means the principal outstanding under the Intercompany Hull Loan as of the date of the Drawdown Notice for the First Advance, as evidenced to and agreed by the Facility Agent;

“Proceeds” means:

 

  (a) all Final Disposition Proceeds;

 

  (b) all Total Loss Proceeds and all Restricted Proceeds;

 

  (c) all Requisition Compensation;

 

  (d) following the occurrence of an Event of Default, all Earnings Account Receivables, all Debt Service Reserve Account Receivables, all Proceeds Account Receivables, all Project Account Receivables and all Loss of Earnings Proceeds; and

 

  (e) all and any other monies, property and other assets representing or deriving from all or any of the Secured Property and the Collateral;

“Proceeds Account” means the interest bearing Dollar account in the joint names of the Borrower and the Head Charterer opened or, as the context may require, to be opened with the Account Bank designated “Proceeds Account”, with account number 00.00.00.000 and includes any redesignation and sub-accounts thereof;

“Proceeds Account Receivables” means:

 

  (a) all Proceeds;

 

  (b) all Liquidated Damages;

 

  (c) all other amounts which are from time to time required, pursuant to the terms of the Facility Documents, to be deposited in the Proceeds Account;

“Proceeds Application Event” means:

 

  (a) the occurrence of a Termination Date; or

 

  (b) the Borrower becomes obliged to pre-pay the Facility pursuant to any provision of clauses 6.4 and 6.5;

“Project” means the upgrade of the Rig in accordance with the Construction Contract and all other Material Contracts, including, without limitation, so that the Rig complies with the Specifications, and the transportation or movement of the Rig from the Place of Construction to its initial Approved Location in a condition which satisfies the requirements of the Charter;

 

26

“Project Account” means the interest bearing Dollar account in the joint names of the Borrower and the Borrower opened or, as the context may require, to be opened with the Account Bank designated “Project Account”, with account number 00.00.00.000 and includes any redesignation and sub-accounts thereof;

“Project Account Receivables” means:

 

  (a) all Earnings (other than Mobilisation Fees and Swap Receipts) received prior to the Initial Charter Hire Date;

 

  (b) all Principal Advances, all Swap Advances and the Intercompany Construction Interest Advance;

 

  (c) all Equity provided to the Borrower after the date hereof to enable the Borrower to meet its obligations under the Transaction Documents; and

 

  (d) all other amounts which are from time to time required, pursuant to the terms of the Facility Documents, to be deposited in the Project Account;

“Project Cost” means, at any time, the costs, expressed in Dollars, of the completion of the Project (being costs identified in the most recent Budget at that time, which will include, for the avoidance of doubt, the amount of any Project Cost Over Run at that time, any Transportation Costs and any Management Fees, but shall exclude the Hull Cost and any Mobilisation Costs);

“Project Cost Over Run” means:

 

  (a) the amount by which Project Cost exceeds or will exceed the Construction Facility Limit; or

 

  (b) the amount by which the aggregate amount of interest and Commitment Fee payable pursuant to this Agreement plus the amount of the Intercompany Construction Interest Advance exceeds or will exceed the Interest Facility Limit; or

 

  (c) the amount by which the Mobilisation Costs exceed the Mobilisation Fees; or

 

  (d) the amount by which the Charter Compensation exceeds or will exceed the Liquidated Damages;

“Project Counterparties” means together:

 

  (a) the Charterer;

 

  (b) the Head Charterer;

 

  (c) the Sponsor;

 

  (d) each Builder;

 

  (e) the Parent Guarantor;

 

  (f) each party (other than a Security Party) to any Material Contract,

and “Project Counterparty” means any of them;

“Project Documents” means the Construction Contract, each Material Contract, the Services Agreement, the Charter, the Bareboat Charter, the Parent Guarantee, the Management Agreement, the Sub-Contract Agreement and the documents described in more detail in Schedule 7 hereto and any change orders or other deed, document, agreement or instrument amending, varying, supplementing, ratifying, confirming, extending or renewing any of the foregoing documents or any of the terms and conditions thereof or consenting to the amendment or variation of the terms and conditions thereof;

 

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“Project Expenditure Certificate” means a certificate in the form and terms set out in Schedule 10 to this Agreement;

“Quarter Date” means each 31 January, 30 April, 31 July and 31 October;

“Quarter Period” means each period commencing upon the day following a Quarter Date up to and including the next following Quarter Date;

“Quotation Day” means a day (other than Saturday or Sunday) on which banks are open for normal banking business in London;

“Receipts” means, in relation to any Application Date, all (if any) amounts which are actually applied under clauses 5.2.2 to 5.2.7 (inclusive) of the Deed of Proceeds and Priorities on that Application Date (other than any amounts applied out of the Debt Service Reserve Account);

“Receivables” means:

 

  (a) all Proceeds;

 

  (b) all Insurance Proceeds;

 

  (c) all Liability Insurance Proceeds;

 

  (d) all Loss of Earnings Proceeds;

 

  (e) all Earnings Account Receivables; and

 

  (f) all Debt Service Reserve Account Receivables;

“Receivables Acknowledgement” means the acknowledgement issued or to be issued by the Charterer to the Security Trustee in respect of the assignment by the Head Charterer of all receivables under the Charter pursuant to the General Assignment, in the form set out in Part 5 of Schedule 1 of the General Assignment;

“Reference Banks” means, in relation to LIBOR, the head offices of ING Bank N.V., Calyon and Bayerische Hypo - und Vereinsbank AG and, in relation to the Mandatory Cost, means the principal London offices of ING Bank N.V., Calyon and Bayerische Hypo - und Vereinsbank AG;

“Regulatory Authority” means the Classification Society, The Liberian Maritime Authority and each other applicable regulatory authority in Brazil (including, but not limited to (a) the Federal Revenue Secretariat (Customs) (a department of the Ministry of Finance) (b) Central Bank of Brazil, (c) DECEX - Department of Foreign Trade Operations, (d) National Council of Immigration, (e) Directorate of Ports and Coasts (f) IBAMA - Brazilian Institute of Environment and Natural Restorable Resources, (g) Ministry of Aeronautics and (h) ANVISA - National Board of Sanitary Vigilance) or in Liberia or elsewhere or as the case may be, such other body carrying out the functions which are carried out by the Classification Society or The Liberian Maritime Authority or such other body either in Brazil or in any other location in which the Rig is operated;

“Related Company” in relation to any person means (i) any Subsidiary for the time being of such person, (ii) any company or other entity of which such person is for the time being a Subsidiary and (iii) any Subsidiary for the time being of any such person referred to in (ii) above;

“Relevant Environmental Claim” means, in relation to a Security Party, an Environmental Claim that has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against that Security Party or any of its Subsidiaries if, in the case of the Sponsor and its Subsidiaries and Constellation and its Subsidiaries only, that Environmental Claim could if successful have a Material Adverse Effect;

 

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“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled or has a permanent establishment;

“Relevant Obligations” (i) of the Borrower, means all monies, obligations and liabilities from time to time owing or payable, undertaken, incurred or assumed by the Borrower to or in favour of the Beneficiaries (or any of them) under or pursuant to this Agreement and all other monies, obligations and liabilities from time to time owing or payable, undertaken, incurred or assumed by the Borrower or by any other Security Party to or in favour of the Beneficiaries (or any of them) or to the Security Trustee on their behalf under or pursuant to any other Transaction Document, and (ii) of any other Security Party, means all monies, obligations and liabilities from time to time owing or payable, undertaken, incurred or assumed by that Security Party or by any other Security Party to or in favour of the Beneficiaries (or any of them) or to the Security Trustee on their behalf under and pursuant to any Facility Document and all monies, obligations and liabilities from time to time owing or payable, undertaken, incurred or assumed by that Security Party or by any other Security Party (including the Borrower) under or pursuant to any other Transaction Document;

“Relevant Substance” means and includes oil and its products and any other substance whatsoever (whether in a solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) or waste (as defined in the Environmental Protection Act 1990) which is capable of causing harm to man or any other living organism supported by the Environment, or damaging the Environment or public health or welfare and whose release into the Environment is regulated or prohibited by Environmental Law;

“Repeating Representations” means, for the purposes of this Agreement, clauses 9.1, 9.2, 9.3.2, 9.3.3, 9.4, 9.5, 9.6, 9.11, 9.13, 9.17, 9.18, 9.19, 9.20, 9.21, 9.22, 9.23, 9.24, 9.25, 9.27, 9.30, 9.31, 9.32, 9.33 and 9.34 of this Agreement and for the purposes of the Deed of Proceeds and Priorities, means clauses 13.1, 13.2, 13.3.2, 13.3.3, 13.4, 13.5, 13.6, 13.11, 13.13, 13.16, 13.17, 13.18, 13.19, 13.20, 13.21, 13.22, 13.23, 13.24, 13.25, 13.27, 13.30, 13.31, 13.32, 13.33 and 13.34 of the Deed of Proceeds and Priorities;

“Replacement Schedule of Minimum Repayment Amounts” means any replacement Schedule of Minimum Repayment Amounts calculated by the Facility Agent in accordance with clause 6.8;

“Required Amount” for any Application Date means the amount set out opposite that Application Date in the Schedule of Minimum Repayment Amounts and “Required Amounts” means any or all of them;

“Requisition Compensation” means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Rig;

“Restricted Proceeds” means any Insurance Proceeds or Rig Rights Proceeds if the full amount of the same exceeds the Casualty Amount;

“Rig” means the semi submersible drilling rig more particularly described in the Construction Contract;

“Rig Rights” means all rights, including, without prejudice to the foregoing, the benefit of all warranties and indemnities, to which the Borrower may from time to time be entitled from any Builder, manufacturer, sub-contractor, supplier or repairer in respect of the manufacture, supply, condition, design, conversion, installation or operation of the Rig or any part thereof, whether under or pursuant to the Construction Contract or any Material Contract or otherwise, and shall include any Guarantee Rights, as more particularly described in Schedule 7;

“Rig Rights Proceeds” means the proceeds of all Rig Rights;

“ROF” means the Registro da Operaçao Financeira required pursuant to the Charter to enable payments of the Charter Rate to be remitted in Dollars to the Earnings Account or another account of the Head Charterer outside Brazil;

 

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“Schedule of Minimum Repayment Amounts” means at any time the Original Schedule of Minimum Repayment Amounts or, if at such time a Replacement Schedule of Minimum Repayment Amounts has been substituted therefor pursuant to and in accordance with clause 6.8 (Replacement of Schedule of Minimum Repayment Amounts), the latest Replacement Schedule of Minimum Repayment Amounts;

“Second Intercompany Hull Advance” means an Advance made pursuant to clause 4.1 and specified as the Second Intercompany Hull Advance in the relevant Drawdown Notice;

“Secured Obligations” means the obligations of the Borrower and each other Security Party to the Beneficiaries or any of them under this Agreement and the other Facility Documents and includes such obligations in respect of all sums of money (including, without limitation, the Loan and interest accrued and accruing thereon) from time to time owing to the Beneficiaries or any of them, whether actually or contingently and whether or not due and payable, under this Agreement and the other Facility Documents or any of them (disregarding for this purpose the provisions of clause 22 of the Deed of Proceeds and Priorities, clause 19 of the Deed of Undertaking and any analogous provision of any other Facility Document) and includes the obligations of the Charterer to the Beneficiaries under Charterer Acknowledgement (if executed by the Charterer) and the obligations of the Builder to the Beneficiaries under the Builder Acknowledgement;

“Secured Property” means (i) the security, powers, rights, titles, benefits and interests (both present and future, actual or contingent) constituted by and conferred upon the Beneficiaries or any of them under or pursuant to the Security Documents and any notices or acknowledgements or undertakings given in respect of or in connection with any of the Security Documents (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to any Beneficiary in the Security Documents and any notices or acknowledgements or undertakings given in respect of or in connection with any of the Security Documents), (ii) all moneys and other assets paid or transferred to or vested in any Beneficiary or any agent of any Beneficiary or any Insolvency Official or received or recovered by any Beneficiary or any agent of any Beneficiary or any Insolvency Official pursuant to, or in connection with, any of the Security Documents and any notices, or acknowledgements or undertakings given in respect of or in connection with any of the Security Documents, whether from any Security Party (or the Charterer, in the case of the Charterer Acknowledgement, or the Builder, in the case of the Builder Acknowledgement), or any other person and (iii) all moneys, investments, and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Beneficiary or any agent of any Beneficiary or any Insolvency Official in respect of the same (or any part thereof);

“Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect;

“Security Documents” means the Pre-Completion Guarantee, the Pre-Completion Guarantee Supplement, the Debt Service Letter of Credit, the Mortgage, the Borrower Share Pledge, the Head Charterer Partnership Pledge, the Accounts Pledge, the General Assignment, the Deed of Proceeds and Priorities, the Deed of Undertaking, the Sponsor Assignment, each Power of Attorney, the Receivables Acknowledgement, the Charterer Acknowledgement, the Builder Acknowledgement, the Notices of Assignment, the Letter of Authorisation and any other deed, document, agreement or instrument executed by any party as security for, or in relation to, its or any other party’s obligations to any of the Beneficiaries including any deed, document, agreement or other instrument amending, varying, supplementing, ratifying, confirming, extending, acceding to or renewing any of the foregoing documents or any of the terms and conditions thereof or consenting to the amendment or variation of the terms and conditions thereof;

“Security Parties” means, at any time, each party (including the Borrower) to any Facility Document which at that time has not been released and discharged by the Security Trustee other than the Beneficiaries, the Account Bank and the Charterer;

 

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“Security Period” means the period commencing on the date of this Agreement and terminating on the date on which all the Secured Obligations have been paid, repaid, satisfied, performed and discharged in full;

“Security Trustee” means ING Bank N.V. of Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, in its capacity as security trustee for the purposes of the Facility Documents or such other person as may be appointed security trustee pursuant to clause 16.15.2, and includes its successors in title;

“Services Agreement” means the service agreement no. 2050.0028828.07.2 dated 5 February 2007 entered into or to be entered into between the Sponsor and the Charterer relating to the Rig;

“Services Rate” means the whole of the amount payable to the Sponsor per day by the Charterer pursuant to the Services Agreement from time to time;

“Share” in relation to a Lender, means the proportion which that Lender’s Commitment bears to the Total Commitments;

“Shortfall” means, in relation to any Application Date, the amount (if any) by which the Due Amounts in relation to that Application Date exceed the Receipts in relation to that Application Date;

“Skycrest” means Skycrest Overseas Inc., a company incorporated under the laws of the British Virgin Islands with company number 493925 and with its registered office at Xxxxxxxxx Xxxxxxxx, X.X. Xxx 00, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx;

“Specifications” means the Specifications set forth in Exhibit VIII to the Construction Contract;

“Spill” means any actual or threatened emission, spill, release or discharge of any Relevant Substance into the Environment;

“Sponsor” means Queiroz Galvão Óleo e Gás S.A., a company organised under the laws of Brazil, registered under the Tax Roll number 30.521.090/001-27 and its registered office at Avenue Presidente Xxxxxxx Xxxxxx, 51-7th Floor, Rio de Janeiro, RJ, CEP. 00000-000, Xxxxxx;

“Sponsor Assignment” means the assignment in the Agreed Form executed or, as the context may require, to be executed by the Sponsor in favour of the Security Trustee;

“Sponsor Cut-Off Date” means:

 

  (a) for the purposes of clauses 3, 5, 8.1, 8.2.3, 8.2.5, 8.2.6, 8.2.8, 8.2.9, 8.2.10, 8.2.14, 8.2.16, 8.2.17, 8.2.18, 8.2.19, 8.2.20, 8.2.22, 8.2.23, 8.2.24, 8.3.2(c), 8.3.3, 8.3.4, 8.3.5, 9.1, 10, 13, 14, 15, 16, 17, 18 (to the extent clause 18 relates to any of the other clauses referred to in this paragraph (a)), 19 and (to the extent it relates to any of the other clauses referred to in this paragraph (a)) 20 of the Deed of Undertaking, the earlier to occur of:

 

  (1) the end of the Security Period;

 

  (2) the later of (i) ninety (90) days after the date on which the Security Trustee takes action to enforce: (A) the Mortgage; and/or (B) the Borrower Share Pledge; and/or (C) the Head Charterer Partnership Pledge, provided that, in the case of the Head Charterer Partnership Pledge only, the Head Charterer, on the instructions of the Lenders, has not performed its obligations under Sub-Contract Agreement in accordance with its terms, and (ii) the Debt Service Undertaking Release Date;

 

  (b) for all other purposes, the earliest to occur of:

 

  (1) the end of the Security Period;

 

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  (2) the date on which the Services Agreement is terminated by the Charterer;

 

  (3) the later of (i) ninety (90) days after the date on which the Security Trustee takes action to enforce the Mortgage and/or the Borrower Share Pledge, and (ii) the Debt Service Undertaking Release Date;

“Star Drilling” means Star International Drilling Limited;

“Sub-Contract Agreement” means the operating agreement sub-contract agreement entered into or to be entered into by the Head Charterer and the Sponsor whereby the Sponsor agrees to provide, or procure the provision of, certain services the Head Charterer is obliged to provide pursuant to the terms of the Charter;

“Subsequent Advance” means any Principal Advance drawn down or to be drawn down by the Borrower after the Drawdown Date for the First Advance in accordance with clauses 3 and 4 (and includes the Intercompany Principal Advances);

“Subsidiary” means any company or entity directly or indirectly controlled by another person, for which purpose “control” means either ownership of more than fifty per cent. (50%) of the voting share capital (or equivalent right of ownership) of such company or entity or power to direct its policies and management whether by contract or otherwise;

“Substitute Basis” shall have the meaning given to that term in clause 5.6.2;

“Swap Advance” means an Advance (corresponding to a Swap Payment under the Hedging Agreements) made pursuant to clause 4.1 and specified as a Swap Advance in the relevant Drawdown Notice;

“Swap Payment” means, in relation to a Hedging Agreement and an Interest Payment Date, the amount payable (if any) by the Borrower to or in favour of the Hedging Provider under and pursuant to that Hedging Agreement on that Interest Payment Date in respect of the difference between interest calculated at the Fixed Rate applicable under that Hedging Agreement and interest calculated at the floating rate then applicable under that Hedging Agreement in respect of the Interest Period ending on that Interest Payment Date (after giving effect to any contractual set-off and/or netting provisions contained in that Hedging Agreement), but shall exclude, for the avoidance of doubt, any amount payable to the Hedging Provider by the Borrower under that Hedging Agreement as a result or consequence of any termination of, or default under, that Hedging Agreement;

“Swap Receipt” means, in relation to a Hedging Agreement and an Interest Payment Date, the amount payable (if any) by the Hedging Provider to, or in favour of, the Borrower under and pursuant to that Hedging Agreement on that Interest Payment Date in respect of the difference between interest calculated at the floating rate then applicable under that Hedging Agreement in respect of the Interest Period ending on that Interest Payment Date and interest calculated at the Fixed Rate applicable under that Hedging Agreement (after giving effect to any contractual set-off and/or netting provisions contained in that Hedging Agreement), but shall exclude, for the avoidance of doubt, any amount payable by the Hedging Provider to the Borrower under that Hedging Agreement as a result or consequence of any termination of, or default under, that Hedging Agreement.

“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of a similar nature together with interest thereon and penalties in respect thereof and “Tax” and “Taxation” shall be construed accordingly;

“Technical Adviser” means Okeanos BV or any replacement marine surveyor, valuer or other technical consultant appointed by the Facility Agent on behalf of the Lenders (in consultation with the Sponsor) to review the progress of the Project and report to the Lenders in accordance with the scope of work set out in clause 20;

 

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“Termination Date” means the earliest to occur of:

 

  (a) the Total Loss Date;

 

  (b) the date stipulated by the Facility Agent in any notice issued pursuant to clause 11.3 (Acceleration) or, where such notice either declares the Loan to be repayable on demand or does not stipulate a date, the date of that notice;

 

  (c) the date on which the Total Commitments are reduced to zero pursuant to clause 6.3 (Additional voluntary prepayment);

 

  (d) the date on which the Borrower is required to make prepayment of the Loan (i) pursuant to clause 6.4 (Mandatory prepayment) (other than any partial mandatory prepayment in accordance with clause 6.4.3) or (ii) pursuant to clause 6.5 (Prepayment on Total Loss); or

 

  (e) the date specified in any notice given by the Facility Agent pursuant to clause 13.1 (unlawfulness);

“Timbauba” means Timbauba International Ltd., a company incorporated under the laws of the British Virgin Islands with company number 491980 and with its registered office at Xxxxxxxxx Xxxxxxxx, X.X. Xxx 00, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx;

“Total Commitments” means at any relevant time the total of the Commitments of all the Lenders at such time;

“Total Cost” means the aggregate of the Project Cost and the Hull Cost;

“Total Loss” means:

 

  (a) the actual or constructive or compromised or arranged total loss of the Rig; or

 

  (b) the Compulsory Acquisition of the Rig; or

 

  (c) the expiration of one hundred and eighty (180) days after the Rig shall have been requisitioned for use or hire by a Government Entity or other competent authority, whether de jure or de facto;

“Total Loss Date” means the date upon which any of the following occurs or is deemed to occur:

 

  (a) in the case of an actual total loss of the Rig, at noon (London time) on the actual date on which the Rig was lost or, if such date is not known, on the day on which the Rig was last reported;

 

  (b) in the case of a constructive total loss of the Rig, upon the date and at the time notice of abandonment of the Rig is given to the insurers of the Rig for the time being (provided a claim for such constructive total loss is admitted by the insurers) or, if the insurers do not admit such a claim, at the date and at the time at which a constructive total loss is subsequently adjudged by a competent court of law to have occurred;

 

  (c) in the case of a compromised or arranged total loss, the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of the Rig;

 

  (d) in the case of Compulsory Acquisition, the date upon which the relevant requisition of title or other compulsory acquisition occurs; or

 

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  (e) in the case of the requisition of the Rig for use or hire by a Government Entity or other competent authority, upon the expiry of the one hundred and eighty (180) day period referred to in paragraph (c) of the definition of “Total Loss”;

“Total Loss Proceeds” means any Insurance Proceeds arising in respect of a Total Loss and any Requisition Compensation received in respect of a Compulsory Acquisition;

“Transaction Documents” means and includes the Facility Documents, the Project Documents, the Intercompany Loan Agreements, the Management Agreement and the Sub-Contract Agreement and shall include any other deed, document, agreement or instrument executed under pursuant to or in connection with any of the foregoing documents, including any deed, document, agreement or instrument amending, varying, confirming, extending or renewing any of the foregoing documents or any terms and conditions thereof or consenting to the amendment or variation of the terms or conditions thereof;

“Transfer Certificate” means a certificate substantially in the terms of Schedule 4;

“Transferee” has the meaning given to that term in clause 15.3 (Transfer);

“Transportation Costs” means any costs or expenses incurred as a result of or in connection with the transportation or movement of the Rig from the Place of Construction to the initial Approved Location but shall exclude, for the avoidance of doubt, any Mobilisation Costs;

“Undertaking Party” has the meaning given to that term in the Deed of Undertaking;

“Unrestricted Proceeds” means all Insurance Proceeds or Rig Rights Proceeds other than Restricted Proceeds;

“Value Added Tax” or “VAT” means value added tax as provided for in VATA and legislation (whether delegated or otherwise) supplemental thereto or in any primary or subordinate legislation promulgated by the European Union or any body or agency thereof and Belasting over Toegevoegde Waarde imposed in The Netherlands and any Tax similar or equivalent to value added tax imposed by any country other than the United Kingdom and any similar or turnover Tax replacing or introduced in addition to any of the same;

“VATA” means the Value Added Tax Xxx 0000; and

“Yard Acceptance Confirmation” has the meaning given to it in clause 20.2.

 

1.3   Headings

Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.

 

1.4   Construction of certain terms

In this Agreement, unless the context otherwise requires:

 

1.4.1   references to an “Agent”, the “Arranger”, any “Beneficiary”, any “Lender”, any “Security Party”, the “Borrower”, the “Facility Agent”, the “Security Trustee” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Facility Agent and Security Trustee, any person for the time being appointed as Facility Agent or, as the case may be, Security Trustee or Security Trustees in accordance with the Transaction Documents;

 

1.4.2   references to clauses, paragraphs or Schedules are to be construed as references to the clauses and paragraphs of, and schedules to, this Agreement and references to this Agreement include its schedules;

 

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1.4.3   references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as from time to time amended, varied, supplemented, extended, novated or substituted in accordance with its terms, or, as the case may be, with the agreement of the relevant parties and (where such consent is, by the terms of this Agreement or the relevant document, required to be obtained as a condition to such amendment being permitted) the prior written consent of the relevant Agent, the Majority Lenders or the Lenders, as the case may be, and, for the avoidance of doubt, where such consent is required, if any such agreement or other document is amended, varied, supplemented, extended, novated or substituted otherwise than with the consent of the relevant Agent, the Majority Lenders or the Lenders, as the case may be, each reference to that agreement or document (including references to a class of agreements, such as the “Transaction Documents”) shall be references to or include reference to that agreement or document as it existed prior to the relevant amendment, variation, supplement, extension, novation or substitution and, until the due execution and delivery of any Agreed Form document, references to the provisions of, and terms and expressions defined in, any such document shall be construed as references to the provisions of and terms and expressions defined in the Agreed Form of such document;

 

1.4.4   references to a “regulation” include any present or future regulation, rule, official directive, requirement, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, authority, department or central bank or any regulatory, self-regulatory or other authority or organisation;

 

1.4.5   words importing the plural shall include the singular and vice versa;

 

1.4.6   unless otherwise specified, references to a time of day are to Amsterdam time;

 

1.4.7   references to a “person” shall be construed as including references to an individual, partnership, joint venture, firm, company, corporation, association, trust, unincorporated body of persons or any state or any of its agencies, departments or political sub-divisions (whether having distinct legal personality or not);

 

1.4.8   “assignee” or “assignees” of a person shall include any person who has assumed all or some of the rights and/or obligations of the relevant person, whether by assignment or novation or otherwise;

 

1.4.9   references to “assets” include all or part of any present and future business, undertaking, real property, personal property, uncalled capital, revenue and any rights of any description (whether actual or contingent, present or future) to receive, or require delivery of, any of the foregoing;

 

1.4.10   “guarantee” means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any Indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its Indebtedness and “guaranteed” shall be construed accordingly;

 

1.4.11   references to the “equivalent” of an amount specified in a particular currency (the “specified currency amount”) shall be construed as a reference to the amount of the other relevant currency which can be purchased with the specified currency amount in the London foreign exchange market at or about 11 a.m. London time on the day on which the calculation falls to be made for spot delivery as determined by the Facility Agent;

 

1.4.12   a “law” (1) includes any common law, statue, decree, constitution, regulation, order, judgment or directive of any governmental entity; (2) includes any treaty, pact, compact or other agreement to which any government entity is a signatory or party; (3) includes any judicial or administrative interpretation or application thereof and (4) is a reference to that provision as amended, substituted or re-enacted; and

 

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1.4.13   references to any enactment shall be deemed to include references to such enactment as re-enacted, modified, amended or extended.

 

1.5   Rights of third parties

 

1.5.1   Unless expressly provided to the contrary in this Agreement, any person who is not a party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Xxx 0000 to enforce its terms.

 

1.5.2   Notwithstanding any term of this Agreement, the consent of any person who is not a party to this Agreement is not at any time required to rescind or amend this Agreement.

 

1.5.3   Subject always to the provisions of clause 16.18, each of the Beneficiaries shall have the right to enjoy and enforce the benefit of any term of this Agreement which is expressed to be for its benefit or expressly purports to confer a benefit on such person.

 

1.6   Instructions of Lenders

Where this Agreement or any other Facility Document provides for (i) any matter to be determined by reference to the opinion of the Majority Lenders or, as the case may be, all of the Lenders, (ii) any matter to be subject to the consent or request of the Majority Lenders or, as the case may be, all of the Lenders, or (iii) any action to be taken on the instructions of the Majority Lenders or, as the case may be, all of the Lenders, that opinion, consent, request or instructions shall (as between the Lenders) only be regarded as having been validly given or issued by the Majority Lenders or, as the case may be, all of the Lenders if all of the Lenders shall have received prior notice of the matter or action in respect of which that opinion, consent, request or instructions is or are required and the Majority Lenders or, as the case may be, all of the Lenders shall have given or issued (or, if expressly contemplated by the relevant provision of this Agreement or any other Facility Document, be deemed to have been given or issued) that opinion, consent, request or instructions, but so that each party hereto other than the Facility Agent shall be entitled (and bound) to assume that that notice shall have been duly received by all of the Lenders and that the relevant number shall have been obtained to constitute Majority Lenders or, as the case may be, all of the Lenders whether or not this is in fact the case unless the Facility Agent shall have notified that party that that relevant number has not been obtained.

 

1.7   Instructions of Facility Agent

Where this Agreement or any other Facility Document provides for any action to be taken by the Security Trustee on the instructions of the Facility Agent, each party hereto other than the Facility Agent and the Security Trustee shall be entitled (and bound) to assume that those instructions have been validly given or issued whether or not this is in fact the case unless the Facility Agent or the Security Trustee shall have notified that party that those instructions have not been given or issued.

 

1.8   Deed of Proceeds and Priorities

This Agreement shall be read together with the Deed of Proceeds and Priorities. In the event of any conflict between any provision of this Agreement, on the one hand, and any provision of the Deed of Proceeds and Priorities, on the other hand, the provisions of the Deed of Proceeds and Priorities shall prevail.

 

1.9   Dutch terms

In this Agreement, where it relates to a Dutch person, a reference to:

 

1.9.1   a necessary action to authorise where applicable, includes without limitation:

 

  (a) any action required to comply with the Dutch Works Councils Act (Wet op de ondernemingsraden); and

 

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  (b) obtaining a positive advice (positief advies) from the competent works council(s);

 

1.9.2   a winding up, administration or dissolution includes a Dutch person being declared bankrupt (failliet verklaard) or dissolved (ontbonden);

 

1.9.3   a moratorium includes surséance van betaling and granting a moratorium includes surséance verleend;

 

1.9.4   any step or procedure taken in connection with insolvency proceedings includes a Dutch person having filed a notice under section 36 of the Tax Collection Act of the Netherlands (Invorderingswet 1990);

 

1.9.5   a trustee in bankruptcy includes a bankruptcy;

 

1.9.6   an administrator includes a bewindvoerder;

 

1.9.7   an attachment includes a beslag.

 

2   The facility

 

2.1   Amount

 

2.1.1   The Lenders, relying upon each of the representations and warranties in clause 9, agree to make available upon and subject to the terms of this Agreement a principal sum up to the Facility Limit.

 

2.1.2   The obligation of each Lender under this Agreement shall be to contribute that proportion of each Advance which, as at the Drawdown Date of such Advance, its Commitment bears to the Total Commitment. No Lender shall be obliged to contribute to any Advance any amount in excess of its Commitment.

 

2.2   Reduction of the Facility Limit

 

2.2.1   The Borrower acknowledges and agrees that the Facility Limit, the Principal Facility Limit, the Hull Facility Limit, the Construction Facility Limit, the Interest Facility Limit and the Commitments have been calculated on the basis that the fixed interest rate under the Hedging Agreements will be not more than six per cent. (6%) per annum.

 

2.2.2   If that assumption proves to be incorrect, the Facility Agent and the Borrower shall consult together to determine the consequences thereof. Unless the Facility Agent and the Borrower agree otherwise during that consultation, the Facility Limit, the Principal Facility Limit, the Construction Facility Limit, the Hull Facility Limit and the Interest Facility Limit shall be recalculated as contemplated in clause 2.2.3.

 

2.2.3   The Facility Agent shall in consultation with the Borrower and on the basis of a revised cash flow model produced by the Facility Agent (such cash flow model shall use the new fixed interest rate but shall otherwise be prepared on the same basis as the cash flow model used in the Information Memorandum) determine the revised amounts of the Facility Limit, the Principal Facility Limit, the Construction Facility Limit, the Hull Facility Limit and the Interest Facility Limit (which shall in any event not exceed the Facility Limit, the Principal Facility Limit, the Construction Facility Limit, the Hull Facility Limit or, as the case may be, the Interest Facility Limit as at the date of this Agreement) which may, for the avoidance of doubt, reduce if the fixed interest rate under either or both of the Hedging Agreements exceeds six per cent. (6%) per annum, and such revised amounts of the Facility Limit, the Principal Facility Limit, the Construction Facility Limit, the Hull Facility Limit and the Interest Facility Limit will from the date of that determination be the Facility Limit, the Principal Facility Limit, the Construction Facility Limit, the Hull Facility Limit and the Interest Facility Limit for all purposes of this Agreement and the other Facility Documents.

 

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2.2.4   Any reduction of the Facility Limit shall reduce the Total Commitments by the amount of such reduction and the Commitment of each Lender shall be reduced in the proportion which that Lender’s Commitment bears to the Total Commitments.

 

2.3   Obligations several

The obligations of each Lender under this Agreement are several; the failure of any Lender to perform such obligations shall not relieve any other Lender, the Arranger, the Facility Agent, the Security Trustee or the Borrower of any of their respective obligations or liabilities under this Agreement nor shall the Facility Agent, the Arranger or the Security Trustee be responsible for the obligations of any Lender (except for its own obligations, if any, as a Lender) nor shall any Lender be responsible for the obligations of any other Lender under this Agreement.

 

2.4   Interests several

Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) the interests of the Facility Agent, the Arranger, the Security Trustee and the Lenders are several and the amount due to the Facility Agent (for its own account), to the Arranger, to the Security Trustee and to each Lender is a separate and independent debt. The Facility Agent, the Arranger, the Security Trustee and each Lender shall (subject to the express provisions of this Agreement (including clause 16.18) and the other Facility Documents) have the right to protect and enforce their respective rights arising out of this Agreement and it shall not be necessary for the Facility Agent, the Arranger, the Security Trustee or any Lender (as the case may be) to be joined as an additional party in any proceedings for this purpose, provided however that no Lender acting alone in its capacity as a Lender shall be entitled to declare an Event of Default.

 

3   Conditions

 

3.1   General Conditions

The obligation of each Lender to make its Commitment available under this Agreement shall be subject to the condition that (a) the Agents, or their duly authorised representative, shall have received not later than two (2) Banking Days or such shorter period as the Facility Agent may agree before the date on which any Drawdown Notice in respect of the First Advance is given, the documents and evidence specified in Schedule 3 part 1, in form and substance satisfactory to the Agents (and, in the case of the documents and evidence specified in paragraphs 4 and 10 thereof, in form and substance satisfactory to the Lenders) and (b) the Facility Agent shall have notified the Lenders of the receipt of such documents and evidence, which the Facility Agent agrees to do promptly after receipt thereof.

 

3.2   Conditions precedent to making of an Advance

The obligation of each Lender to contribute to any Advance is subject to the further conditions that at the date of the relevant Drawdown Notice (in the case of Principal Advances, Swap Advances and the Intercompany Construction Interest Advance) and on the Drawdown Date of that Advance (in the case of Principal Advances, the Intercompany Construction Interest Advance, Swap Advances or Interest Advances):

 

3.2.1   no Default shall have occurred and be continuing or would result from the making of such Advance;

 

3.2.2   the proposed Drawdown Date is a Banking Day within the Availability Period;

 

3.2.3       

 

  (a) with respect to the First Intercompany Hull Advance:

 

  (i) there shall be only one (1) First Intercompany Hull Advance;

 

  (ii) the First Intercompany Hull Advance shall not exceed the Hull Facility Limit;

 

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  (iii) the First Intercompany Hull Advance shall not exceed eighty per cent. (80%) of the Hull Value or, if the First Intercompany Hull Advance would otherwise exceed eighty per cent. (80%) of the Hull Value, the original maximum aggregate amount pursuant to clause 2.14 of the Pre-Completion Guarantee shall have been increased to an amount such that the First Intercompany Hull Advance shall not exceed the aggregate of eighty per cent. (80%) of the Hull Value and the amount of such increase, pursuant to the Pre-Completion Guarantee Supplement, and all of the conditions referred to in the Pre-Completion Guarantee Supplement shall have been satisfied in full and/or waived; and

 

  (iv) the First Intercompany Hull Advance shall be made prior to the Pre-Completion Guarantee Release Date;

 

  (b) with respect to the Intercompany Construction Principal Advance:

 

  (i) there shall be only one (1) Intercompany Construction Principal Advance;

 

  (ii) the Intercompany Construction Principal Advance, when aggregated with all Principal Construction Advances advanced or to be advanced on or prior to the Drawdown Date of the Intercompany Principal Construction Advance, shall not exceed the Construction Facility Limit;

 

  (iii) the Intercompany Construction Principal Advance shall not exceed the Principal Construction Balance;

 

  (iv) the Facility Agent shall be satisfied that no part of the proceeds of the Intercompany Construction Principal Advance shall be applied in or towards payment of any amount of Existing Project Cost Over Run which exceeds thirty five million Dollars ($35,000,000);

 

  (v) the Intercompany Construction Principal Advance shall be made no earlier than the Intercompany Construction Loan Repayment Date; and

 

  (vi) the Intercompany Construction Principal Advance shall be made on the same date as the Intercompany Construction Interest Advance;

 

  (c) with respect to the Second Intercompany Hull Advance (if any):

 

  (i) the Pre-Completion Guarantee Release Date shall have occurred;

 

  (ii) there shall be no more than one (1) Second Intercompany Hull Advance; and

 

  (iii) the amount of the Second Intercompany Hull Advance, when aggregated with the First Intercompany Hull Advance, shall not exceed the Hull Facility Limit;

 

  (d) with respect to any Principal Construction Advance:

 

  (i) the amount of that Principal Construction Advance shall be not less than ten million Dollars ($10,000,000);

 

  (ii) the Facility Agent shall be satisfied that no part of the proceeds of that Principal Construction Advance shall be applied in or towards payment of any amount of Existing Project Cost Over Run which exceeds thirty five million Dollars ($35,000,000);

 

  (iii) the amount of that Principal Construction Advance, when aggregated with the Intercompany Construction Principal Advance and all other Principal Construction Advances made or to be made on or prior to the Drawdown Date of that Principal Construction Advance, will not exceed the Construction Facility Limit; and

 

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  (iv) if that Principal Construction Advance is to be used to reimburse Constellation for an Interim Payment, the amount of that Principal Construction Advance shall not exceed that Interim Payment;

 

  (e) the amount of any Interest Advance, when aggregated with all Interest Advances, all Swap Advances and the Intercompany Construction Interest Advance advanced or to be advanced on or prior to that Drawdown Date, shall not exceed the Interest Facility Limit;

 

  (f) the amount of the Intercompany Construction Interest Advance shall not exceed seven million Dollars ($7,000,000) and shall not, when aggregated with all Interest Advances and all Swap Advances advanced or to be advanced on or prior to that Drawdown Date, exceed the Interest Facility Limit; and

 

  (g) the amount of any Swap Advance, when aggregated with all Swap Advances, all Interest Advances and the Intercompany Construction Interest Advance advanced or to be advanced on or prior to that Drawdown Date, shall not exceed the Interest Facility Limit; and

 

3.2.4   the Sponsor Cut-Off Date has not occurred.

 

3.3   Conditions precedent to the First Advance

The obligation of each Lender to contribute to the First Advance shall be subject to the further conditions that:

 

3.3.1   the Agents, or their duly authorised representative, shall have received, no later than two (2) Banking Days or such shorter period as the Agents may agree, before the date on which the Drawdown Notice for the First Advance is given, the documents and evidence specified in Schedule 3 part 2 in form and substance satisfactory to the Agents (and, in the case of the documents and evidence specified in paragraphs 3 and 15(g) thereof, in form and substance satisfactory to the Lenders); and

 

3.3.2   the Facility Agent shall have notified the Lenders of the receipt of such documents and evidence which the Facility Agent agrees to do promptly after receipt thereof,

provided that if (A) the Drawdown Date of the First Advance will be on or prior to the date falling ten (10) Banking Days after the date of this Agreement, and (B) the Facility Agent (acting on the instructions of the Majority Lenders, each Lender acting reasonably) believes that during the period commencing on the date of this Agreement and ending on that Drawdown Date there has been no change in circumstances or law which may adversely affect any right, title or interest of any Beneficiary, any of the documents or evidence which has been provided pursuant to and in accordance with clause 3.1 shall not be required to be provided again under this clause 3.3.

 

3.4   Conditions precedent to a Subsequent Advance

The obligation of each Lender to contribute to a Subsequent Advance shall be subject to the further conditions that:

 

3.4.1   the Agents, or their duly authorised representative, shall have received, no later than two (2) Banking Days or such shorter period as the Agents may agree, before the date on which the Drawdown Notice for that Subsequent Advance is given, the documents and evidence specified in part 3 of Schedule 3 in form and substance satisfactory to the Agents (and where paragraph 4 of part 3 of Schedule 3 applies, the documents specified therein in form and substance satisfactory to the Lenders); and

 

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3.4.2   the Facility Agent shall have notified the Lenders of the receipt of such documents and evidence, which the Facility Agent agrees to do promptly after receipt thereof.

 

3.5   Conditions precedent to the Intercompany Construction Interest Advance

The obligation of each Lender to contribute to the Intercompany Construction Interest Advance shall be subject to the further conditions that:

 

3.5.1   the Agents, or their duly authorised representative, shall have received, no later than two (2) Banking Days or such shorter period as the Agents may agree, before the date on which the Drawdown Notice for the Intercompany Construction Interest Advance is given, evidence satisfactory to the Facility Agent that the Intercompany Construction Loan has become repayable and that accrued interest thereunder is at least equal to the amount of the Intercompany Construction Interest Advance;

 

3.5.2   the Facility Agent shall have notified the Lenders of the receipt of such evidence, which the Facility Agent agrees to do promptly after receipt thereof; and

 

3.5.3   the Borrower has satisfied all relevant conditions to the making of the Intercompany Construction Principal Advance, and that the Intercompany Construction Principal Advance is made simultaneously with the Intercompany Construction Interest Advance.

 

3.6   Conditions precedent to a Swap Advance

The obligation of each Lender to contribute to a Swap Advance shall be subject to the further conditions that:

 

3.6.1   the Hedging Agreements have not been terminated for any reason;

 

3.6.2   all Swap Payments and Swap Receipts due and payable under the Hedging Agreements prior to the Drawdown Date of that Swap Advance have been paid or, as the case may be, received; and

 

3.6.3   that Swap Advance does not exceed the amount of the Swap Payment due and payable by the Borrower on the Drawdown Date of that Swap Advance.

 

3.7   Conditions precedent to the Completion Date

The occurrence of the Completion Date shall be subject to the further conditions that:

 

3.7.1   the Agents, or their duly authorised representative, shall have received the documents and evidence specified in part 5 of Schedule 3 in form and substance satisfactory to the Agents (and, in the case of the documents and evidence specified in paragraphs 4 and 11 thereof, in form and substance satisfactory to the Lenders, each Lender acting reasonably); and

 

3.7.2   the Facility Agent shall have notified the Lenders of the receipt of such documents and evidence, which the Facility Agent agrees to do promptly after receipt thereof; and

 

3.7.3   the Facility Agent, or its duly authorised representative, shall have received confirmation that:

 

  (a) the Repeating Representations; and

 

  (b)

the Continuing Representations,

 

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are true and correct as if each were made with respect to the facts and circumstances existing at the date of such confirmation and the Facility Agent shall have notified the Lenders of the receipt of such confirmation which the Facility Agent agrees to do promptly after receipt thereof.

 

3.8   Waiver of conditions precedent

The conditions specified in this clause 3 and clause 14.3.16 of the Deed of Proceeds and Priorities are inserted solely for the benefit of the Lenders and may be waived on their behalf in whole or in part and with or without conditions by the Facility Agent, acting on the instructions of the Majority Lenders, and:

 

3.8.1   (in the case of the First Advance) without prejudicing the right of the Facility Agent acting on such instructions to require fulfilment of such conditions in whole or in part in respect of a Subsequent Advance, Intercompany Construction Interest Advance, Swap Advance or the Completion Date; and

 

3.8.2   (in the case of a Subsequent Advance, Swap Advance or the Intercompany Construction Interest Advance) without prejudicing the rights of the Facility Agent acting on such instructions to require fulfilment of such conditions in whole or in part in respect of any other Subsequent Advance, Swap Advance, the Completion Date and/or, as the case may be, the Intercompany Construction Interest Advance,

apart from the conditions specified in paragraphs 3, 4, 7 and 10 of part 1 of Schedule 3, paragraphs 2, 3, 7, 8, 15, 16 and 18 of part 2 of Schedule 3, paragraphs 3, 4 and 8 of part 3 of Schedule 3, paragraphs 2, 3, 4, 6, 7 and 9 of part 4 of Schedule 3 and paragraphs 2, 4, 6, 7, 9, 10 and 11 of part 5 of Schedule 3, which in each case may not be waived by the Facility Agent whether in whole or in part and with or without conditions unless all the Lenders so agree.

 

3.9   Financial Covenants

If, following the issue of a Compliance Certificate, the same shows that there is any failure to comply with any then applicable Financial Covenant on the applicable Financial Covenant Measurement Date, the Facility Agent may (without prejudice to any of the rights of the Lenders or the Facility Agent under clause 11) request, and the Borrower shall, promptly after such request deliver to the Facility Agent or its duly authorised representative evidence as to any remedial action taken by the Sponsor and/or Constellation (as the case may be) which will result in future compliance with such financial covenants and undertakings with effect from the date on which such remedial action is taken.

 

3.10   Conditions subsequent

The Borrower will provide, within sixty (60) days of the date of this Agreement, evidence satisfactory to the Agents that this Agreement, the Deed of Proceeds and Priorities, the Mortgage and the General Assignment have been (i) translated into Portuguese by a sworn public translation, and (ii) registered with the competent Registry of Deeds and Documents.

 

4   Advances

 

4.1   Drawdown Notices for Principal Advances, Swap Advances and the Intercompany Construction Interest Advance

 

4.1.1   When the Borrower wishes to draw down a Principal Advance, the Intercompany Construction Interest Advance or a Swap Advance and is entitled to do so under the terms of this Agreement, it shall serve a Drawdown Notice on the Facility Agent not later than noon Central European time on the third Banking Day before the proposed Drawdown Date, or such lesser period as the Facility Agent (in consultation with the Majority Lenders) may agree. The Drawdown Notice shall set out:

 

  (a) the Drawdown Date for that Principal Advance, Swap Advance or, as the case may be, Intercompany Construction Interest Advance; and

 

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  (b) the amount of such Principal Advance, Swap Advance or, as the case may be, Intercompany Construction Interest Advance.

 

4.1.2   A Drawdown Notice shall be effective on actual receipt by the Facility Agent and, once given, shall, subject as provided in clause 5.6 (Market disruption, non-availability), be irrevocable.

 

4.2   Interest Advances

 

4.2.1   On each Interest Payment Date and each Commitment Fee Date which falls before the Initial Charter Hire Date, the Lenders shall, subject to clause 3.2 and unless the Facility Agent has issued a notice pursuant to clause 11.3, be deemed to advance to the Borrower a principal amount equal to the amount of (a) interest then due for payment on the Loan by the Borrower pursuant to clause 5.1 less the amount of any Swap Receipts (if any) payable to the Borrower on the relevant Interest Payment Date and/or, as the case may be, (b) Commitment Fee then due for payment on the undrawn Total Commitments by the Borrower pursuant to clause 7.1.2.

 

4.2.2   Each amount deemed so advanced pursuant to clause 4.2.1 shall be treated as having been made and applied in or towards payment of the interest or, as the case may be, Commitment Fee in respect of which it is advanced and shall for all purposes of this Agreement be treated as an Interest Advance made by the Lenders and shall be capitalised so as to form part of the Loan and shall bear interest in accordance with the other provisions of this Agreement. For the avoidance of doubt, no Drawdown Notice need be given by the Borrower in relation to an Interest Advance deemed to be made and applied pursuant to this clause 4.2.

 

4.2.3   The provisions of this clause 4.2 are without prejudice to the obligation of the Borrower to pay all amounts which are payable under this Agreement when due. If as a consequence of any term of this Agreement an Interest Advance is not deemed to be advanced, or the amount of an Interest Advance deemed to be advanced is less than the full amount of interest on the Loan then due for payment pursuant to clause 5.1 or, as the case may be, the full amount of Commitment Fee on the undrawn Total Commitments then due for payment pursuant to clause 7.1.2, the Borrower shall be obliged to pay when due any such interest or, as the case may be, Commitment Fee to the extent not satisfied by an Interest Advance.

 

4.2.4   The Facility Agent will notify the Borrower as soon as practicable, but in any case, provided that the Facility Agent has received notification from the Borrower of the amount of any Swap Receipts payable to the Borrower under the Hedging Agreements on the Drawdown Date of the relevant Interest Advance:

 

  (a) no later than the Drawdown Date of that Interest Advance, if the aggregate of that Interest Advance and those Swap Receipts will not be sufficient to satisfy all interest due on that Drawdown Date on the Loan; and

 

  (b) no later than the date falling two (2) Banking Days prior to the relevant Drawdown Date, if the aggregate of any Interest Advance and any Swap Advance which would otherwise have been made on that Drawdown Date would have resulted in the Interest Facility Limit being exceeded.

 

4.3   Notification to Lenders

Subject to the provisions of clause 3 (Conditions) the Facility Agent shall notify each Lender of its portion of the relevant Advance and any Swap Receipts:

 

4.3.1   in respect of each Principal Advance, each Swap Advance and the Intercompany Construction Interest Advance, promptly after receipt of a Drawdown Notice complying with the terms of this Agreement (and in any case not later than 11 a.m. Central European time on the third Banking Day before the proposed Drawdown Date, other than in circumstances where the Facility Agent and the Majority Lenders have agreed a lesser notice period under clause 4.1, in which case notification shall be given as soon as practicable) and at the same time, provide a copy of the Project Expenditure Certificate which the Facility Agent has received from the Borrower on the date of such Drawdown Notice; and

 

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4.3.2   in respect of each Interest Advance deemed to be made pursuant to clause 4.2 and/or any Swap Receipts, on the third Banking Day before the applicable Interest Payment Date or, as the case may be, Commitment Fee Date other than in circumstances where the Facility Agent and the Majority Lenders have agreed a lesser notice period, in which case notification shall be given as soon as practicable.

 

4.4   Availability

Subject to the provisions of clause 3 (Conditions) and following receipt of notification in accordance with clause 4.3 above:

 

4.4.1   in respect of each Principal Advance, each Swap Advance and the Intercompany Construction Interest Advance, each of the Lenders shall on the Drawdown Date for each such Advance make available to the Facility Agent its portion of the relevant Advance in accordance with clause 8.2 (Payments by the Lenders); and

 

4.4.2   in respect of each Interest Advance, each of the Lenders shall on the applicable Interest Payment Date or, as the case may be, Commitment Fee Date, be deemed to make available to the Facility Agent its portion of the relevant Interest Advance for application by the Facility Agent in accordance with clause 4.2 above.

 

4.5   Termination of Commitments

Any part of the Commitments undrawn at the end of the Availability Period shall thereupon be automatically reduced to zero.

 

4.6   Application of proceeds

Without prejudice to the Borrower’s obligations under clause 10.2.3 (Use of proceeds), none of the Beneficiaries shall have any responsibility for the application by the Borrower of the proceeds of any Advance and, in the case of the Interest Advances deemed to be made pursuant to clause 4.2 above, these shall be treated as being applied by the Facility Agent in accordance with clause 4.2.2.

 

5   Interest and Interest Periods; alternative interest rates

 

5.1   Normal interest rate

The Borrower shall pay interest on each Advance or, as the case may be, the Loan in respect of each Interest Period relating thereto on the relevant Interest Payment Date at the rate per annum determined by the Facility Agent to be the aggregate of (a) the applicable Margin, (b) LIBOR for such Interest Period and (c) the applicable Mandatory Cost, if any. The net amount of interest due in respect of the Loan on any Interest Payment Date falling before the Initial Charter Hire Date (after deducting therefrom the amount (if any) of any Swap Receipts payable to the Borrower under the Hedging Agreements) shall, subject to the provisions of clause 4.2, be capitalised and deemed to be paid by virtue of the Interest Advances deemed to be made in respect of that interest pursuant to clause 4.2. Thereafter, the Borrower shall pay interest on the Loan in respect of the Interest Period commencing on the last Interest Payment Date falling prior to the Initial Charter Hire Date and ending on the next following Quarter Date falling in a succeeding calendar month to the Initial Charter Hire Date and such interest shall not be capitalised.

 

5.2   Determination of Interest Periods

Each Interest Period shall be of a duration of three (3) months (subject to clause 5.1 and the remaining provisions of this clause 5.2) or such other period as the Borrower shall agree with the Facility Agent (acting on the instructions of the Majority Lenders acting reasonably) from time to time, so that:

 

5.2.1   the initial Interest Period in respect of the First Advance or, if an Interest Advance (in respect of Commitment Fee) is deemed to be made prior to the First Advance, in respect of that Interest Advance, shall commence on the Drawdown Date for the First Advance or, as the case may be, Interest Advance and shall end on the next following Quarter Date and each subsequent Interest Period in respect of the First Advance or, as the case may be, Interest Advance shall commence on the expiry of the previous Interest Period and end on the next following Quarter Date;

 

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5.2.2   the initial Interest Period for any Subsequent Advance, any Swap Advance or the Intercompany Construction Interest Advance shall commence on the Drawdown Date for that Advance and shall end on the last day of the then current Interest Period of the Loan and, on the last day of such Interest Period, that Advance shall be consolidated with the Loan and shall thereafter together constitute the Loan;

 

5.2.3   the initial Interest Period in respect of any Subsequent Advance, any Swap Advance or the Intercompany Construction Interest Advance made during the Interest Period in which the Initial Charter Hire Date falls shall commence on the Drawdown Date for that Advance and shall end on the next following Quarter Date which falls in a calendar month succeeding the calendar month in which the Initial Charter Hire Date falls and, on the last day of such Interest Period, the First Advance, each Subsequent Advance, each Swap Advance and (if applicable) the Intercompany Construction Interest Advance made during any previous Interest Period shall be consolidated and shall thereafter together constitute the Loan;

 

5.2.4   the first Interest Period for any Interest Advance shall commence on the date on which it is deemed to be advanced and shall end on the last day of the Interest Period then current or, as the case may be, which then commences, and thereafter all Interest Periods for any Interest Advance shall be coterminous and any such Interest Advance and the Loan shall be treated as one Loan;

 

5.2.5   where the last day of an Interest Period would otherwise fall on a day which is not a Banking Day, the last day of such Interest Period shall fall instead on the next following Banking Day or, as the case may be, the immediately preceding Banking Day in accordance with the provisions of clause 8.3; and

 

5.2.6   the final Interest Period shall not extend beyond the Final Maturity Date.

 

5.3   Interest for late payment

 

5.3.1   If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this clause 5.3) on its due date for payment under this Agreement or any of the Facility Documents to which the Borrower is party, the Borrower shall pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Facility Agent pursuant to clause 5.3.2. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than three (3) months as selected by the Facility Agent (after consultation with the Lenders so far as reasonably practicable in the circumstances) each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding period.

 

5.3.2   The rate of interest applicable to each such period shall be the aggregate (as determined by the Facility Agent) of (a) two per cent. (2.00%) per annum (b) the applicable Margin (c) LIBOR and (d) the applicable Mandatory Cost, if any, unless such unpaid sum is an amount of principal which shall have become due and payable by reason of a declaration by the Facility Agent under clause 11.3 (Acceleration) or a prepayment obligation pursuant to clauses 6.2 (Voluntary Prepayment), 6.3 (Additional Voluntary Prepayment), 6.4 (Mandatory Prepayment) or 13.1 (Unlawfulness), prior to the next succeeding Interest Payment Date relating thereto, in which case the first such period selected by the Facility Agent shall end on such Interest Payment Date and interest shall be payable on such unpaid sum during such period at a rate of two per cent. (2.00%) above the rate applicable thereto immediately before it shall have become so due and payable.

 

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5.3.3   Interest under this clause 5.3 shall be due and payable on the last day of each period determined by the Facility Agent pursuant to this clause 5.3 or, if earlier, on the date on which the sum in respect of which such interest is accruing shall actually be paid. If, for the reasons specified in clause 5.6.1(a) or 5.6.1(b), the Facility Agent is unable to determine a rate of LIBOR in accordance with the definition thereof in clause 1.2 and the foregoing provisions of this clause 5.3, each Lender shall promptly notify the Facility Agent of the cost of funds to such Lender (determined in accordance with the following provisions of this clause but excluding the Margin) and interest on any sum not paid on its due date for payment shall be calculated for each Lender at a rate determined by the Facility Agent to be two per cent. (2.00%) per annum above the aggregate of the applicable Margin and the cost to such Lender of raising funds through its treasury operations at that time through any sources of funds available to such Lender at that time.

 

5.4   Notification of Interest Periods and interest rate

The Facility Agent shall notify the Borrower and the Lenders promptly of the duration of each Interest Period or other period for the calculation of interest (or, as the case may be, default interest) and of each rate of interest determined by it under this clause 5.

 

5.5   Reference Bank quotations

If any Reference Bank is unable or otherwise fails to furnish a quotation for the purpose of calculating LIBOR (where such a quotation is required having regard to paragraph (b) of the definition of “LIBOR” in clause 1.2), the interest rate for the relevant Interest Period shall be determined, subject to clause 5.6, on the basis of the quotations furnished by the remaining Reference Banks in accordance with the procedure set out in paragraph (b) of the definition of “LIBOR” in clause 1.2.

 

5.6   Market disruption; non-availability

 

5.6.1   If and whenever, at any time prior to the commencement of any Interest Period:

 

  (a) (at a time when Reference Bank quotations are required having regard to the definition of “LIBOR” in clause 1.2) the Facility Agent shall have determined, after consultation with the Reference Banks (which determination shall, in the absence of manifest error, be conclusive), that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period in accordance with any of the methods of determining LIBOR set out in paragraphs (a) and (b) of the definition of “LIBOR”; or

 

  (b) none or only one of the Reference Banks supplies the Facility Agent with a quotation for the purpose of calculating LIBOR (where such a quotation is required having regard to paragraph (b) of the definition of “LIBOR” in clause 1.2); or

 

  (c)

the Facility Agent shall have received notification from one or more Lenders with Contributions aggregating not less than thirty three and a third per cent. (33 1/3%) of the Loan (or, prior to the Drawdown Date for the First Advance, Commitments aggregating not less than thirty three and a third per cent. (33 1/3%) of the Total Commitments) that the cost to it of obtaining matching deposits in the London interbank market would be in excess of LIBOR,

the Facility Agent shall forthwith give notice (a “Determination Notice”) to the Borrower and to each of the Lenders. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. If a Determination Notice is given at any time during the Availability Period, the undrawn amount of the Total Commitments shall not be borrowed until notice to the contrary is given to the Borrower by the Facility Agent but Interest Advances will continue to be deemed to be made pursuant (and subject) to clause 4.2.

 

5.6.2  

During the period of ten (10) days after any Determination Notice has been given by the Facility Agent under clause 5.6.1, each Lender shall certify an alternative basis (the “Substitute Basis”) for making available or, as the case may be, maintaining its Contribution to the Facility. The

 

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  Substitute Basis may (without limitation) include alternative interest periods or alternative rates of interest but shall include a margin above the cost of funds to such Lender (as such cost of funds is determined in accordance with the provisions of clauses 5.3.2 and/or 5.3.3 above) equivalent to the Margin and Mandatory Cost (if any) applicable to that Lender’s Contribution and, with the agreement of the Borrower, the Substitute Basis may include an alternative currency or currencies. Each Substitute Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Facility Agent notifies the Borrower that none of the circumstances specified in clause 5.6.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.

 

5.7   Break Costs

 

5.7.1   The Borrower shall, within three (3) Banking Days of demand by a Lender, pay to that Lender its Break Costs attributable to all or any part of an Advance or the Loan being prepaid by the Borrower on a day other than the last day of an Interest Period for that Advance or the Loan.

 

5.7.2   Each Lender shall, promptly after a demand by the Facility Agent, provide a certificate confirming, and providing reasonable details of, the amount of its Break Costs for any Interest Period in which they accrue.

 

6   Reduction, prepayment

 

6.1   Reduction

 

6.1.1   The Total Commitment shall be reduced on each Application Date by the Required Amount for that Application Date. Any reduction of the Total Commitments shall reduce the Commitment of each Lender in the proportion which that Lender’s Commitment bears to the Total Commitments.

 

6.1.2   If on any Application Date (after the reduction of the Total Commitments in accordance with clause 6.1.1 above) there remain any amounts available for application in accordance with clause 5.2.12 of the Deed of Proceeds and Priorities, the Total Commitments shall be further reduced by the balance of such moneys applied to the Loan and the Commitment of each Lender shall be further reduced in the proportion which that Lender’s Commitment bears to the Total Commitments.

 

6.1.3   If, after the reduction of the Total Commitments on any Application Date, the Loan would exceed the Total Commitments as so reduced, the Borrower shall on such Application Date pay to the Facility Agent (for the account of the Lenders) such amount in repayment of the Loan as shall ensure that the Loan does not exceed the Total Commitments at such time.

 

6.1.4   The Total Commitments shall be reduced to zero on the Final Maturity Date and any amount of the Loan outstanding on the Final Maturity Date shall be repaid in full, together with all accrued interest and any other amount relating thereto payable under this Agreement and the other Facility Documents.

 

6.2   Voluntary prepayment

Provided that no Event of Default has occurred and is continuing, the Borrower may, upon ten (10) Banking Days written notice to the Facility Agent, prepay the Loan after the Availability Period has ended in whole or in part (being $5,000,000 or any larger sum which is either an integral multiple of $5,000,000 or an amount complying with the requirements of this clause) on any Interest Payment Date without premium or penalty or Break Costs but without prejudice to any of the Borrower’s obligations under clause 12 (Indemnities). Upon any such notice of prepayment being given, the Total Commitments shall be reduced by an amount equal to the amount of the prepayment, provided however that, if an Event of Default has occurred and is continuing, the Borrower shall only be entitled to prepay the Loan in full.

 

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6.3   Additional voluntary prepayment

Provided that no Event of Default has occurred and is continuing, the Borrower may also, upon five (5) Banking Days written notice to the Facility Agent, prepay (in whole but not in part only), without premium or penalty, but without prejudice to its obligations under clauses 5.6 (Market disruption), 8.5 (Grossing up for Taxes) and 13.2 (Increased Costs) or the obligations of the Lenders under clause 13.4 (Mitigation):

 

6.3.1   the Contribution of any Lender to which the Borrower shall have become obliged to pay additional amounts under clause 8.5 or 13.2;

 

6.3.2   any Lender’s Contribution to which a Substitute Basis applies by virtue of clause 5.6.2;

 

6.3.3   the Contribution of any Lender which has notified the Facility Agent of its Additional Cost Rate (under paragraph 3 of Schedule 8); or

 

6.3.4   the Contribution of any Lender which withholds consent to any sale of issued share capital of a Core Company as contemplated in clause 14.2.19(c) of the Deed of Proceeds and Priorities.

Upon any notice of such prepayment being given, the Commitment of the relevant Lender shall be reduced to zero and the Total Commitments shall be reduced by an amount equal to the Commitment of the relevant Lender immediately prior to the delivery of that notice.

 

6.4   Mandatory prepayment

If at any time:

 

6.4.1       

 

  (a) any Facility Document (other than the Charterer Acknowledgement) is not or ceases to be effective or any material provision thereof is not or ceases to be in full force and effect or any Facility Document (other than the Charterer Acknowledgement) or any material provision thereof is alleged by any Security Party or, in the case of the Builder Acknowledgement, by the Builder (or either of them) to be ineffective for any reason, the Borrower shall, on the date falling ten (10) Banking Days following receipt by the Borrower and the applicable Security Party of notification of such ineffectiveness or alleged ineffectiveness from the Security Trustee, prepay the Loan in full, whereupon the Total Commitments shall be reduced to zero, unless prior to that time (i) the ineffectiveness has been remedied or (ii) the Security Trustee acting with the consent of the Majority Lenders has been satisfied that such allegation is without foundation or is spurious; or

 

  (b) the Charterer Acknowledgement (if issued by the Charterer) is not or ceases to be effective or any material provision thereof is not or ceases to be in full force and effect or the Charterer Acknowledgement or any material provision thereof is alleged by the Charterer in writing to be ineffective for any reason, the Borrower shall, on the date falling ten (10) Banking Days following receipt by the Borrower of notification of such ineffectiveness or alleged ineffectiveness from the Security Trustee, prepay the Loan in full, whereupon the Total Commitments shall be reduced to zero, unless prior to that time (i) the ineffectiveness has been remedied or (ii) the Security Trustee acting with the consent of the Majority Lenders has been satisfied that such allegation is without foundation or is spurious or (iii) the Borrower has provided or has procured the provision of replacement security satisfactory to the Security Trustee acting with the consent of the Lenders; or

 

6.4.2       

 

  (a) it becomes unlawful for any Security Party (or, in the case of the Builder Acknowledgement, the Builder (or either of them)) to perform all or any of its material obligations under this Agreement or any of the Facility Documents (other than the Charterer Acknowledgement) or any of the Project Documents, in each case to which it is party, for any reason; or

 

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  (b) this Agreement or any Facility Document (other than the Charterer Acknowledgement) or any Project Document or any material provision thereof ceases to be lawful and enforceable for any reason; or

 

  (c) any of the Security Documents comprising a security interest ceases to constitute a valid first priority security interest over the asset or property to which it relates; or

 

  (d) it becomes unlawful at any time for the Charterer to perform all or any of its respective material obligations under the Charterer Acknowledgement (if the same is issued) or the Charterer Acknowledgement or any material provision thereof otherwise ceases to be legal and enforceable,

the Borrower shall, on the date falling fifteen (15) Banking Days following receipt by the Borrower and the applicable Security Party of notice from the Security Trustee of such unlawfulness or failure of security (or, if earlier, the Banking Day following receipt of such notice prior to the unlawfulness or failure of security taking effect), prepay the Loan in full, whereupon the Total Commitments shall be reduced to zero unless prior to that time (i) any such unlawfulness, illegality and/or unenforceability has been remedied or (ii) the Borrower has provided or has procured the provision of replacement security satisfactory to the Security Trustee acting with the consent of the Lenders; or

 

6.4.3   on any Application Date any amounts remain available for application in accordance with clause 5.2.12 of the Deed of Proceeds and Priorities, such amounts shall be applied in pre-payment of the Loan in accordance with clause 5.2.12 of the Deed of Proceeds and Priorities and this clause 6.4.3.

 

6.5   Prepayment on Total Loss or damage

 

6.5.1   Upon the Rig becoming a Total Loss or suffering damage or being involved in an incident which, in the opinion of the Majority Lenders, based on the advice of the Technical Adviser, may result in the Rig subsequently being determined to be a Total Loss, the Total Commitments shall be reduced to zero. On the date upon which the Total Loss Proceeds or Requisition Compensation are received from the insurers, the Borrower shall prepay the Loan in full. If those Total Loss Proceeds or Requisition Compensation received are sufficient to pay, repay, satisfy and discharge the Secured Obligations in full, the Facility Agent shall apply any of those Total Loss Proceeds or Requisition Compensation remaining after such payment, repayment, satisfaction and discharge in accordance with clause 5.2 (other than clause 5.2.1) of the Deed of Proceeds and Priorities. If the Total Loss Proceeds or Requisition Compensation have not been received from the insurers within sixty (60) days of the applicable date referred to in the definition of “Total Loss Date”, the Facility Agent shall be entitled to declare an acceleration of the Loan pursuant to clause 11.3 of this Agreement, provided however that, prior to the applicable date referred to in the definition of “Total Loss Date”, the Borrower shall, and shall procure that the Head Charterer shall, pursue the claim diligently and shall keep the Facility Agent informed as to the progress of the claim and any discussions with the insurers in relation thereto and the Facility Agent shall take into account the then current situation and the advice and information of the Borrower provided pursuant hereto when deciding whether to exercise its rights to declare an acceleration of the Loan under clause 11.3.

 

6.5.2   If, pursuant to clause 6.1.3 of the Deed of Proceeds and Priorities, any amount of Restricted Proceeds are required to be applied by the Borrower in prepayment of the Loan, the Borrower shall, on the date those Restricted Proceeds are received, prepay (without premium or penalty, but without prejudice to any of its obligations under this Agreement) the Loan in an amount equal to the amount of those Restricted Proceeds. If those Restricted Proceeds are sufficient to prepay the whole of the Loan, the Facility Agent shall apply any of those Restricted Proceeds remaining after such prepayment in accordance with clause 5.2 (other than clause 5.2.1) of the Deed of Proceeds and Priorities.

 

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6.6   Amounts payable on prepayment

Any prepayment under this Agreement shall be made together with: (a) accrued interest to the date of prepayment (calculated, in the case of any prepayment of a Lender’s Contribution pursuant to clause 6.3 and in respect of the period during which the relevant Substitute Basis has applied by virtue of clause 5.6 (Market disruption), at a rate per annum equal to the rate certified by such Lender to be an interest rate equivalent to the aggregate of (i) the applicable Margin (for the period up to the date of prepayment) and (ii) the cost to such Lender of funding its Contribution for such period calculated on the basis set out in clauses 5.3.2, 5.3.3 and 5.6 (where a Substitute Basis applies) and (iii) the Mandatory Cost, if any, applicable to that Lender’s Contribution); (b) any additional amount payable under clause 8.5 (Grossing up for Taxes) or 13.2 (Increased Costs); and (c) all other sums payable by the Borrower to the relevant Lender under this Agreement and the other Facility Documents including, without limitation, any accrued commitment commission payable under clause 7.1.2 (Fees) and any amounts payable under clause 12.1 (Indemnities).

 

6.7   Notice of prepayment

Every notice of prepayment given by the Borrower shall be effective only on actual receipt by the Facility Agent, shall be irrevocable and shall oblige the Borrower to make such prepayment on the date specified. No amount prepaid may be reborrowed. The Borrower may not prepay the Loan or any part thereof save as expressly provided in this Agreement.

 

6.8   Replacement Schedule of Minimum Repayment Amounts

 

6.8.1   The Original Schedule of Minimum Repayment Amounts has been prepared on the basis of the assumptions that:

 

  (a) the Charter Date of Acceptance shall occur on or prior to 13 December 2008;

 

  (b) there will be twenty (20) Application Dates between the Charter Date of Acceptance and the Final Maturity Date on which payments of Required Amount shall be due;

 

  (c) there will be no change to the Facility Limit, Construction Facility Limit, Hull Facility Limit or Interest Facility Limit pursuant to clause 2.2; and

 

  (d) the total amount drawn down will be three hundred and ten million Dollars ($310,000,000).

 

6.8.2   If any or all of the assumptions made in clause 6.8.1 above proves to be incorrect the Facility Agent shall prepare a Replacement Schedule of Minimum Repayment Amounts within ten (10) Banking Days following the last day of the Availability Period reflecting the actual Charter Date of Acceptance and such Replacement Schedule of Minimum Repayment Amounts shall (in the absence of manifest error) replace the Original Schedule of Minimum Repayment Amounts and shall be deemed to be ‘the Schedule of Minimum Repayment Amounts’ for the purpose of this Agreement. The Facility Agent shall submit the Replacement Schedule of Minimum Repayment Amounts to the Borrower for approval (such approval not to be unreasonably delayed and to be capable of being withheld only in the case of error in such Replacement Schedule of Minimum Repayment Amounts) and shall notify all other parties to this Agreement of such recalculation and provide to them a copy of the Replacement Schedule of Minimum Repayment Amounts.

 

6.8.3  

If at any time a prepayment of part of the Loan is made pursuant to this clause 6 (other than in accordance with clause 6.4.3 if, after the making of the relevant prepayment referred to in clause 6.4.3, the Final Payment will be greater than zero) or clause 13.1, the Facility Agent shall, following such prepayment, re-calculate the Original Schedule of Minimum Repayment Amounts or, as the case may be, any Replacement Schedule of Minimum Repayment Amounts and prepare a Replacement Schedule of Minimum Repayment Amounts on the basis that, in the case of any prepayment of part only of the Loan other than in accordance with clause 6.3 or clause 13.1, the amount of such prepayment shall be applied in inverse order of maturity (being first applied against the Final Payment) or, in the case of any prepayment of part only of the

 

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  Loan, in accordance with clause 6.3 or clause 13.1, the amount of such prepayment shall be applied in or towards repayment of the Loan and the levels of the Required Amounts in the Schedule of Minimum Repayment Amounts shall be reduced proportionately by the amount of such prepayment and, in each case, the Facility Agent shall notify all of the parties to this Agreement of such re-calculation and provide to them a copy of the Replacement Schedule of Minimum Repayment Amounts.

 

6.9   No reborrowing

No amount of the Facility repaid or prepaid may be reborrowed.

 

7   Fees and expenses

 

7.1   Fees

 

7.1.1   The Borrower shall pay to the Facility Agent in Dollars:

 

  (a) on the dates specified in the Fee Letters, for the account of the Arranger, the arrangement and underwriting fee in the amounts agreed between the Borrower and the Arranger in the Fee Letters; and

 

  (b) on the date of this Agreement and each anniversary thereof, until all moneys owing under this Agreement have been paid in full, for the account of the Agents, an agency fee in the amount agreed between the Borrower and the Agents in the Fee Letters.

 

7.1.2   The Borrower shall pay to the Facility Agent in Dollars, in arrear on each Commitment Fee Date, commitment commission for the account of each Lender computed from (and including) the date of this Agreement or, as the case may be, the immediately preceding Commitment Fee Date to (but excluding) the applicable Commitment Fee Date in accordance with clause 8.9 at the rate of zero point five five per cent. (0.55%) per annum on the daily undrawn amount of such Lender’s Commitment, such commission to be payable whether or not any part of the Total Commitments is ever advanced. Commitment Fees shall, subject to the provisions of clause 4.2, be capitalised and deemed to be paid by virtue of the Interest Advances deemed to be made in respect of those Commitment Fees pursuant to clause 4.2.

 

7.2   Expenses

The Borrower shall pay to the Facility Agent on demand:

 

7.2.1   all expenses (subject to any agreed cap thereon and including legal, printing and out-of-pocket expenses, travel expenses and (subject always, in relation to the inspection of the Rig, as provided in clause 11.4 of the Deed of Undertaking) the fees of any technical, valuation and insurances advisers but excluding any amount in relation to management time) properly incurred (provided any expense exceeding US$5,000 shall be approved by the Borrower before being incurred, such approval not to be unreasonably withheld or delayed) by any of the Arranger, Security Trustee or Facility Agent in connection with the review of the Project Documents and the Insurances, the negotiation, preparation and execution and, where relevant, the registration of this Agreement and the Facility Documents, the drawdown of any Advance, the syndication of the Facility, the preparation and distribution of the Information Memorandum and of any amendment, variation, or extension of or supplement to, or the granting of any waiver or consent under, this Agreement or any Facility Document; and

 

7.2.2   all expenses (including legal, printing and out-of-pocket expenses) incurred by any of the Beneficiaries in contemplation of, or otherwise in connection with, the enforcement or attempted enforcement of, or preservation or attempted preservation of any rights under, this Agreement and the Facility Documents and the exercise of the powers granted by, referred to in or otherwise contemplated by, this Agreement and the Facility Documents,

together with interest thereon at LIBOR from (and including) the date on which such expenses were incurred and, at the rate referred to in clause 5.3 (Interest for late payment), from (and

 

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including) the date falling two (2) Banking Days after the date of demand up to (but excluding) the date of payment (as well after as before judgment) and the Facility Agent agrees to notify the Borrower:

 

  (a) of the amount of such expenses promptly after such expenses are incurred and (in the case of expenses incurred by the Beneficiaries) the Facility Agent is made aware thereof;

 

  (b) following a written request from the Borrower (provided that the Borrower may not make such requests more frequently than once in every calendar month), of the amount of any such expenses accrued by the Facility Agent since the last such request or, as the case may be, notification pursuant to paragraph (b) above.

 

7.3   Stamp taxes

The Borrower shall pay and, within three (3) Banking Days of demand, indemnify each Beneficiary against any cost, loss or liability that Beneficiary incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of the Transaction Documents.

 

7.4   Value added tax

 

7.4.1   All consideration or sums expressed to be payable under the Facility Documents by any party to a Beneficiary shall be deemed to be exclusive of any VAT. Subject to clause 7.4.2 below, if VAT is chargeable on any supply made by any Beneficiary to any party in connection with the Facility, that party shall pay to that Beneficiary (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT.

 

7.4.2   If VAT is chargeable on any supply made by any Beneficiary (the “Provider”) to any other Beneficiary (the “Recipient”) in connection with the Facility Documents, and any party is required by the terms of the Facility Documents to pay an amount equal to the consideration for such supply to the Provider, such party shall also pay to the Provider (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT.

 

7.4.3   Where a Beneficiary requires any party to reimburse a Beneficiary for any costs or expenses, that party shall also at the same time pay and indemnify the Beneficiary against all VAT incurred by the Beneficiary in respect of those costs or expenses to the extent that the Beneficiary reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of the VAT.

 

7.5   Indemnity in respect of stamp and other duties

The Borrower shall indemnify each of the Beneficiaries against any liability arising by reason of any delay or omission by the Borrower to pay any such stamp, documentary, registration or other duties or taxes.

 

8   Payments and Taxes; accounts and calculations

 

8.1   No set-off or counterclaim; distribution to the Lenders

The Borrower acknowledges that in performing its obligations under this Agreement, the Lenders will be incurring liabilities to third parties in relation to funding of amounts to the Borrower (such liabilities matching the liability of the Borrower to the Lenders) and that it is reasonable for the Lenders to be entitled to receive payments from the Borrower gross (as provided herein) on the due date in order that the Lenders are put in a position to perform their matching obligations to the relevant third parties. Accordingly, all payments to be made by the Borrower under this Agreement and any of the Facility Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in clause 8.5 (Grossing up for Taxes), free and clear of any deductions or withholdings, in Dollars (except for costs, charges or expenses which shall be payable in the currency in which they are incurred) on the due date to the account of the Facility Agent at such bank as the Facility Agent may from time to time specify for this purpose. Save where this Agreement and/or the Facility Documents provides for

 

52

a payment to be made for the account of a particular Lender (including, without limitation, clauses 5.6 (Market disruption; non-availability), 6.3 (Additional Voluntary Prepayment), 6.4 (Mandatory Prepayment), 7 (Fees and expenses), 8.5 (Grossing up for Taxes), 12.1 (Miscellaneous Indemnities), 12.2 (Currency Indemnity), 13.1 (Unlawfulness) and 13.2 (Increased costs)) in which case the Facility Agent shall distribute the relevant payment to the Lender concerned, payments to be made by the Borrower under this Agreement and/or the Facility Documents shall be for the account of all the Lenders and the Facility Agent shall forthwith distribute such payments in like funds as are received by the Facility Agent to the Lenders rateably in accordance with their Commitments or Contributions, as the case may be, subject always to clause 14.2 (Pro-rata payments).

 

8.2   Payments by the Lenders

All sums to be advanced by the Lenders to the Borrower under this Agreement shall be remitted in Dollars on the relevant Drawdown Date to the account of the Facility Agent at such account as the Facility Agent may from time to time notify the Lenders and the Borrower directs the Facility Agent that all such sums shall be paid by the Facility Agent on such date in like funds as are received by the Facility Agent to the Project Account related to the Facility of which such sums form a part, which the Borrower acknowledges and agrees shall constitute the borrowing thereof by the Borrower.

 

8.3   Non-Banking Days

When any payment under this Agreement would otherwise be due on a day which is not a Banking Day, the due date for payment shall be postponed to the next following Banking Day, unless such Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.

 

8.4   Facility Agent may assume receipt

Where any sum is to be paid under this Agreement or any of the other Facility Documents to the Facility Agent for the account of another person, the Facility Agent may assume that the payment will be made when due and may (but shall not be obliged to) make such sum available to the person so entitled. If it proves to be the case that such payment was not made to the Facility Agent, then the person to whom such sum was so made available shall on request refund such sum to the Facility Agent together with interest thereon sufficient to compensate the Facility Agent for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable shall indemnify the Facility Agent for any and all loss or expense which the Facility Agent may sustain or incur as a consequence of such sum not having been paid on its due date.

 

8.5   Grossing-up for Taxes

 

8.5.1   If at any time the Borrower is required to make any deduction or withholding in respect of Taxes from any payment due under this Agreement and/or the Facility Documents for the account of any Beneficiary (or if the Facility Agent is required to make any such deduction or withholding from a payment to another Beneficiary) the sum due from the Borrower in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, each Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower shall indemnify each Beneficiary against any losses or costs incurred by any of them by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower shall promptly deliver to the Facility Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any such deduction or withholding.

 

8.5.2   The Borrower shall not be required to make any increased payment under this clause 8.5 if the requirement to make such payment arises solely as a consequence of:

 

  (a) the breach by any Beneficiary of its express obligations under this Agreement or any of the Facility Documents; or

 

53

  (b) any assignment or transfer by any Beneficiary of its rights under this Agreement or any Facility Document, or a change in its Facility Office other than an assignment, transfer or change:

 

  (i) permitted or required by this Agreement (subject always to clause 15.8 (Facility Offices)) or the relevant Facility Document;

 

  (ii) effected in order to reduce or mitigate any requirement to make any increased payment where such assignment, transfer or change is made with the agreement of the Borrower (provided however that if the Borrower withholds its consent to such proposed assignment, transfer or change, the Borrower shall be obliged to make the applicable deduction or withholding or other increased payment or to prepay the Loan advanced in accordance with clauses 6.2 and 6.3 above); or

 

  (iii) following any request by any member of the Group.

 

8.5.3   If any Beneficiary determines in its absolute discretion acting in good faith that it has received, realised, utilised and retained a Tax benefit by reason of any deduction or withholding in respect of which the Borrower has made an increased payment under this clause 8.5 that Beneficiary shall, provided always that the applicable Beneficiary has received all amounts which are then due and payable by the Borrower and/or any other Security Party under any of the provisions of the Facility Documents, pay to the Borrower (to the extent that the applicable Beneficiary can do so without prejudicing the amount of that benefit and the right of that Beneficiary to obtain any other benefit, relief or allowance which may be available to it) such amount, if any, as that Beneficiary shall determine in its absolute discretion (acting in good faith) will leave that Beneficiary in no better and no worse position than that Beneficiary would have been in if the deduction or withholding had not been required and that it retains no benefit as a result of the benefit of such deduction (such payment to be made on or prior to the date falling three (3) Banking Days after the date of such determination),

PROVIDED THAT:

 

  (a) the applicable Beneficiary shall have an absolute discretion as to the time at which and the order and manner in which it realises or utilises any Tax benefit;

 

  (b) the applicable Beneficiary shall provide reasonable details of the basis of such determination but shall not be obliged to disclose any information regarding its business, Tax affairs or Tax computations which that Beneficiary considers to be confidential;

 

  (c) if the applicable Beneficiary has made a payment to the Borrower pursuant to this clause 8.5.3 on account of any Tax benefit and it subsequently transpires that that Beneficiary did not receive that Tax benefit, or received a lesser Tax benefit, the Borrower shall pay on demand to that Beneficiary such sum as that Beneficiary may determine as being necessary to restore the after-Tax position of that Beneficiary to that which it would have been had no adjustment under this proviso (c) been necessary; and

 

  (d) the applicable Beneficiary shall not be obliged to make any payment under this clause 8.5.3 if, by doing so, it would contravene the terms of any applicable law or any notice, direction or requirement of any governmental or regulatory authority (whether or not having the force of law).

 

8.6   Accounts

Each Lender shall maintain, in accordance with its usual practices, an account or accounts evidencing the amounts from time to time lent by, owing to and paid to it under this Agreement. The Facility Agent shall maintain a control account showing the Facility, Loan and other sums owing by the Borrower under this Agreement and all payments in respect thereof made by the Borrower from time to time. The control account shall, in the absence of manifest error, be conclusive as to the amount from time to time owing by the Borrower under this Agreement.

 

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8.7   Application of payments prior to a Termination Date

On each Application Date or any other date prior to the Termination Date on which a payment is due to be made by the Borrower under this Agreement or any of the Facility Documents, the provisions of clause 5.2 of the Deed of Proceeds and Priorities shall apply.

 

8.8   Application of payments after a Termination Date

Upon and following the Termination Date, the Facility Agent shall apply the proceeds of realisation of any Collateral and any other moneys received under or pursuant to this Agreement and the Facility Documents in accordance with clause 9 of the Deed of Proceeds and Priorities.

 

8.9   Calculations

All interest, commitment commission and other payments of an annual nature under this Agreement and the Facility Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year. In calculating the actual number of days elapsed in a period which is one of a series of consecutive periods with no interval between them or a period on the last day of which any payment falls to be made in respect of such period, the first day of such period shall be excluded but the last day included.

 

8.10   Certificates conclusive

Any certificate or determination of the Facility Agent or any Lender as to any rate of interest or any other amount payable under this Agreement or any Facility Document shall, in the absence of manifest error, be conclusive and binding on the Borrower and (in the case of a certificate or determination by the Facility Agent) on the Lenders.

 

9   Representations and warranties

The Borrower represents and warrants to each of the Beneficiaries that:

 

9.1   Status

 

9.1.1   it is a limited liability company, duly incorporated and validly existing in good standing under the laws of the British Virgin Islands; and

 

9.1.2   it has the power to own its assets and carry on its business as it is being conducted.

 

9.2   Binding obligations

subject to the Legal Reservations:

 

9.2.1   the obligations expressed to be assumed by it in each Transaction Document to which it is or will be a party are legal, valid, binding and enforceable obligations; and

 

9.2.2   (without limiting the generality of clause 9.2.1 above), each Security Document to which it is or will be a party creates or will create the security interests which that Security Document purports to create and those security interests are or will be valid and effective and each party (other than the Security Parties) to the Assigned Documents has given every consent, approval or waiver that is required from it pursuant to the Assigned Documents in order to create those security interests.

 

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9.3   Non-conflict with other obligations

the entry into and performance by it of, and the transactions contemplated by, the Transaction Documents to which it is a party and the granting of the security constituted or purported to be constituted under the Security Documents to which it is a party do not and will not conflict with:

 

9.3.1   any law or regulation applicable to it (including, but not limited to, Environmental Laws);

 

9.3.2   its constitutional documents; or

 

9.3.3   any agreement or instrument binding upon its assets or constitute a default or termination event (however described) under any such agreement or instrument.

 

9.4   Power and authority

 

9.4.1   it has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents; and

 

9.4.2   no limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.

 

9.5   Validity and admissibility in evidence

 

9.5.1   all Authorisations required or desirable:

 

  (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and

 

  (b) to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,

have been obtained or effected and are in full force and effect except for any Authorisation referred to in clause 9.8 (No filing or stamp taxes), which Authorisations will be promptly obtained or effected after the date of this Agreement, but in any case, on or prior to the Closing Date; and

 

9.5.2   every Authorisation (including without limitation all environmental consents and approvals and any Environmental Licences) which is at the relevant time required by it in connection with the conduct of its business and the ownership, operation, use, exploitation or occupation of its property and assets, has been obtained and is in full force and effect and there has been no default in the observance of the conditions and restrictions (if any) imposed in, or in connection with, any of the same which could result in the revocation, suspension, variation, withdrawal or non-renewal of the same and, to the knowledge of its officers, no circumstances have arisen whereby any remedial action is reasonably likely to be required to be taken by, or at the expense of, the Borrower under or pursuant to any law or regulation (including without limitation Environmental Law) applicable to the business, property or assets of the Borrower.

 

9.6   Governing law and enforcement

subject to any applicable Legal Reservations:

 

9.6.1   the choice of governing law of the Facility Documents will be recognised and enforced in its Relevant Jurisdictions; and

 

9.6.2   any judgment obtained in relation to a Facility Document in the jurisdiction of the governing law of that Facility Document will be recognised and enforced in its Relevant Jurisdictions.

 

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9.7   Insolvency

no:

 

9.7.1   corporate action, legal proceeding or other procedure or step described in clause 11.1.8 (Insolvency); or

 

9.7.2   legal process described in clause 11.1.7 (Legal process),

has been taken or, to its knowledge, threatened against it.

 

9.8   No filing or stamp taxes

under the laws of its Relevant Jurisdiction it is not necessary that the Facility Documents or any of them be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Facility Documents or the transactions contemplated by them except:

 

9.8.1   the registration of the Mortgage with the Registry of Titles and Deeds of Brazil;

 

9.8.2   such other filings as may be referred to in the legal opinions referred to in paragraph 4 of part 1 of Schedule 3,

which registrations and filings, subject to clause 7.2 of the General Assignment, will be made promptly after the date of the relevant Facility Document.

 

9.9   Deduction of Tax

it is not required to make any deduction for or on account of Tax from any payment it may make under any Facility Document.

 

9.10   No Default

 

9.10.1   no Event of Default and, on the date of this Agreement and the Closing Date, no Default is continuing or is reasonably likely to result from the making of any Advance or the entry into, the performance of, or any transaction contemplated by, any Transaction Document; and

 

9.10.2   no other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject which constitutes a Material Adverse Effect.

 

9.11   No misleading information

save as disclosed in writing to the Facility Agent and the Arranger prior to the date of this Agreement (or, in relation to the Information Memorandum, prior to the date of the Information Memorandum):

 

9.11.1   any factual information contained in the Information Memorandum (save for the information contained in sections 1.3, 2.10, 7, 8 and 9 thereof or any information contained in the Information Memorandum which constitutes information that is in the public domain) was true and accurate in all material respects as at the date of the relevant report or document containing the information or (as the case may be) as at the date the information is expressed to be given, save for any corrections made to the Information Memorandum with the agreement of the Facility Agent;

 

9.11.2   any financial projection or forecast contained in the Information Memorandum or the Budget has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and was fair (as at the date of the relevant report or document containing the projection or forecast) and arrived at after careful consideration;

 

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9.11.3   the expressions of opinion or intention provided by or on behalf of the Borrower for the purposes of the Information Memorandum were made after careful consideration and (as at the date of the relevant report or document containing the expression of opinion or intention) were fair and based on reasonable grounds;

 

9.11.4   no event or circumstance has occurred or arisen and no information has been omitted from the Information Memorandum and no information has been given or withheld that results in the information, opinions, intentions, forecasts or projections contained in the Information Memorandum being untrue or misleading in any material respect;

 

9.11.5   all material information provided to a Beneficiary by or on behalf of the Borrower on or before the date of this Agreement and not superseded before that date (whether or not contained in the Information Memorandum) is accurate and not misleading in any material respect and all projections provided to any Beneficiary by or on behalf of the Borrower on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and

 

9.11.6   all other written information provided by any member of the Group or on behalf of the Borrower (including its advisers) to a Beneficiary was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.

 

9.12   Original Financial Statements

 

9.12.1   the Original Financial Statements were prepared in accordance with the Accounting Principles consistently applied;

 

9.12.2   the unaudited Original Financial Statements fairly represent the financial condition and results of operations of the Sponsor, Constellation, the Head Charterer and the Borrower respectively, for the relevant six month period;

 

9.12.3   the audited Original Financial Statements give a true and fair view of the consolidated financial condition and results of operations of the Sponsor, Constellation, the Head Charterer and the Borrower, respectively, during the relevant financial year;

 

9.12.4   there has been no material adverse change in its assets, business or financial condition or the assets, business or consolidated financial condition of the Sponsor Constellation, the Head Charterer or the Borrower since the date of the Original Financial Statements;

 

9.12.5   the most recent financial statements delivered pursuant to clause 14.1.1 (Financial Statements) of the Deed of Proceeds and Priorities:

 

  (a) have been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements; and

 

  (b) give a true and fair view of (if audited) or fairly present (if unaudited) the consolidated financial condition of the Sponsor, Constellation, the Head Charterer and the Borrower, respectively, as at the end of, and consolidated results of operations for, the period to which they relate;

 

9.12.6   the budgets and forecasts supplied under this Agreement were arrived at after careful consideration and have been prepared by or on behalf of the Borrower in good faith on the basis of recent historical information and on the basis of assumptions which were reasonable as at the date they were prepared and supplied; and

 

9.12.7   since the date of the most recent financial statements delivered pursuant to clause 14.1.1 of the Deed of Proceeds and Priorities there has been no material adverse change in the business, assets or financial condition of the Group.

 

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9.13   No proceedings pending or threatened

no litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which, if adversely determined, are reasonably likely to constitute a Material Adverse Effect, have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it.

 

9.14   No breach of laws

to the best of its knowledge and belief, it has not breached any law or regulation which breach constitutes or is reasonably likely to constitute a Material Adverse Effect.

 

9.15   Environmental laws

 

9.15.1   it and, to the best of its knowledge and belief, each Project Counterparty is in compliance with all Environmental Laws applicable to the Project and/or the Rig relevant to that Project Counterparty and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance; and

 

9.15.2   there is no Relevant Environmental Claim in relation to it.

 

9.16   Taxation

 

9.16.1   it is not materially overdue in the filing of any Tax returns and it is not overdue in the payment of any amount in respect of Tax;

 

9.16.2   no claims or investigations are being, or are reasonably likely to be, made or conducted against it with respect of Taxes; and

 

9.16.3   it is resident for Tax purposes only in the British Virgin Islands.

 

9.17   Security and Financial Indebtedness

 

9.17.1   no Security exists over all or any of its present or future assets other than as expressly permitted or required by the Facility Documents; and

 

9.17.2   neither it nor the Head Charterer has any Indebtedness outstanding other than pursuant to the Transaction Documents and (in the case of the Borrower) Indebtedness under the Hedging Agreements, the Intercompany Loan Agreements and in respect of the Interim Payments.

 

9.18   Ranking

the Security granted or purported to be granted under the Security Documents has or will have first ranking priority and it is not subject to any prior ranking or pari passu ranking Security.

 

9.19   Good title to assets

it has a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.

 

9.20   Legal and beneficial ownership

 

9.20.1   it is the sole legal and beneficial owner of the respective assets over which it purports to grant Security pursuant to the Security Documents; and

 

9.20.2   all the members of the Group are or will on the Closing Date be legally and beneficially owned by the members of the Group or, as the case may be, the Group Owners, in the percentages specified in the Group Structure Chart as owner of those shares and assets free from any claims, third party rights or competing interests.

 

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9.21   Shares

the shares of the Borrower and the partnership interests in the Head Charterer are fully paid and, other than pursuant to the Borrower Share Pledge and the Head Charterer Partnership Pledge, are not subject to any option to purchase or similar rights. The constitutional documents of the Borrower do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Borrower Share Pledge. The constitutional documents of the Head Charterer do not and could not restrict or inhibit any transfer of those partnership interests on creation or enforcement of the Head Charterer Partnership Pledge. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan or partnership capital of the Head Charterer or the Borrower (including any option or right of pre-emption or conversion) other than, in the case of the Head Charterer, the Head Charterer Partnership Agreement.

 

9.22   Intellectual Property

it:

 

9.22.1   is the sole legal and beneficial owner of or has licensed to it on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted and as contemplated in the Information Memorandum and the Budget;

 

9.22.2   does not so far as it is aware, in carrying on its businesses, infringe any Intellectual Property of any third party in any respect which has or is reasonably likely to constitute a Material Adverse Effect; and

 

9.22.3   has taken all formal or procedural actions (including payment of fees) required to maintain any material Intellectual Property owned by it.

 

9.23   Group Structure Chart

the Group Structure Chart contained in Schedule 9 of this Agreement is true, complete and accurate in all material respects and shows the following information:

 

9.23.1   each member of the Group, including current name and registration number, its jurisdiction of incorporation and/or establishment, a list of shareholders or members where applicable and indicating whether a member of the Group is not a company with limited liability; and

 

9.23.2   all minority interests in any member of the Group.

 

9.24   Accounting reference date

the Accounting Reference Date of each member of the Group is 31 December.

 

9.25   No adverse consequences

 

9.25.1   it is not necessary under the laws of its Relevant Jurisdictions:

 

  (a) in order to enable any Beneficiary to enforce its rights under any Facility Document; or

 

  (b) by reason of the execution of any Facility Document or the performance by it of its obligations under any Facility Document,

that any Beneficiary should be licensed, qualified or otherwise entitled to carry on business in any of its Relevant Jurisdictions; and

 

9.25.2   no Beneficiary is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of any Facility Document.

 

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9.26   No immunity

neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding in any Relevant Jurisdiction (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).

 

9.27   Rig Earnings and Proceeds

there is no agreement or arrangement whereby any Earnings or Proceeds may be shared with any other person otherwise than as expressly permitted by the terms of the Facility Documents.

 

9.28   No Relevant Substances

no Relevant Substance has at any time been (i) deposited or disposed of in the Environment by it or from the Rig or otherwise in connection with the Project or (ii) kept, treated, imported, exported, processed, manufactured, used, collected, sorted or produced in the Environment by it or by or from the Rig or otherwise in connection with the Project and no Relevant Substance is present in the Environment, in each case in circumstances which are likely to result in an Environmental Claim against it or the Rig.

 

9.29   Details of environmental audits

full details have been given to the Facility Agent of any third party inspections, investigations, studies (including internal studies in relation to specific environmental risks), audits, tests, reviews or other analyses of which it is aware and to which it has access in relation to Environmental Matters relating to the Rig and of all Environmental Licences required by the Rig as at the relevant time of which it is aware and details of which have been provided by it or either Builder or otherwise for the purposes of the Charter, Services Agreement, Construction Contract and Project.

 

9.30   No Encumbrances

none of its business, undertaking, assets, property, rights and revenues is subject to any Encumbrance, other than Permitted Encumbrances.

 

9.31   Other business

it (a) is not currently involved in any business whatsoever, other than as contemplated by the Transaction Documents and (b) does not have (other than as set out in the Group Structure Chart) any Subsidiaries or own any shares or any equity interest in any person.

 

9.32   Ownership

Constellation directly holds, and controls, one hundred per cent. (100%) of the issued share capital of the Borrower unless an Approved Transfer has taken place in relation to the Borrower, in which case Constellation directly owns not less than fifty per cent. (50%) of the Borrower’s issued share capital.

 

9.33   Project Cost

the Loan at the termination of the Availability Period will be less than or equal to seventy point nine per cent. (70.9%) of the Total Cost.

 

9.34   Pensions

neither it nor any of its Subsidiaries has nor at any time has had a place of business, or employed any person, in the United Kingdom.

 

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9.35   Assigned Documents

there are no material contracts, agreements or arrangements between it and any other person relating to or in connection with the Rig other than those which constitute Assigned Documents.

 

9.36   Material Contracts

(other than the Management Agreement) each Material Contract entered into before the date of this Agreement provides for a fixed price and fixed date of completion and the Borrower has provided a certified copy of such Material Contracts and the Management Agreement to the Facility Agent.

 

9.37   Times when representations made

 

9.37.1   all the representations and warranties in this clause 9 are made by the Borrower on the date of this Agreement except for the representations and warranties set out in clause 9.11 which are deemed to be made by the Borrower, with respect to the Information Memorandum, on the date of this Agreement, on the Closing Date and on any later date on which the Information Memorandum (or part of it) is released to the Arranger for distribution in connection with syndication;

 

9.37.2   all the representations and warranties in this clause 9 are deemed to be made by the Borrower on the Closing Date; and

 

9.37.3   the Repeating Representations are deemed to be made by the Borrower on the date of each Drawdown Notice and on the first day of each Interest Period (except that those contained in clause 9.12 will cease to be so made once subsequent financial statements have been delivered under this Agreement).

 

10   Covenants and Undertakings

 

10.1   Information undertakings

The undertakings in this clause 10 remain in force from the date of this Agreement for so long as any amount is outstanding under the Facility Documents or any Commitment is in force.

 

10.1.1   Year-end

The Borrower shall procure that no member of the Group changes its Accounting Reference Date.

 

10.1.2   “Know your customer” checks

 

  (a) If:

 

  (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

  (ii) any change in the status of the Borrower or any other Security Party or the composition of the partners or shareholders (as the case may be) of the Borrower or any other Security Party after the date of this Agreement; or

 

  (iii) a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Facility Agent, the Security Trustee or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary

 

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information is not already available to it, the Borrower shall promptly upon the request of the Facility Agent, the Security Trustee or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent or the Security Trustee (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Facility Agent, the Security Trustee, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied with the results of all necessary “know your customer” or other checks in relation to any relevant person pursuant to the transactions contemplated in the Facility Documents.

 

  (b) Each Lender shall promptly upon the request of the Facility Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself) in order for the Facility Agent to carry out and be satisfied with the results of all necessary “know your customer” or other checks on that Lender or prospective new Lender pursuant to the transactions contemplated in the Facility Documents.

 

10.2   Covenants

The Borrower undertakes with each of the Beneficiaries that, from the date of this Agreement and so long as any moneys are owing under this Agreement or any of the Facility Documents or any Commitment is in force, it will:

 

10.2.1   Notice of Default

promptly upon becoming aware of the same inform the Facility Agent (a) of any occurrence which might adversely affect its ability to perform its obligations under this Agreement, the Assigned Documents and/or the Facility Documents and/or the other Project Documents to which it is party including, but not limited to, (i) the non-delivery of any Bulletin of Measurement by the Charterer to the Head Charterer by the tenth (10th) day of each month, and (ii) any circumstances in which this Agreement or any of the Assigned Documents, Facility Documents or Project Documents to which the Borrower is party have become or are alleged by any party thereto (other than the Beneficiaries) to have become ineffective or in which it has become or is to become unlawful for the Borrower or any other Security Party to perform or to continue to perform its obligations under this Agreement or the applicable Assigned Document, Facility Document or Project Document (excluding the documents described in Schedule 7 hereto in circumstances where the Rig Rights are no longer subsisting) and (b) of any Default under this Agreement or any of the Facility Documents to which the Borrower is party or any default under any of the Assigned Documents or Project Documents to which it is party and (c) from time to time, if so requested by the Facility Agent, confirm to the Facility Agent in writing that, save as otherwise stated in such confirmation, so far as it is aware (i) no Default under this Agreement or any of the Facility Documents to which the Borrower is party or (ii) no default under any Assigned Document or Project Document to which the Borrower is party, in each case has occurred and is continuing;

 

10.2.2   Authorisations and licences

without prejudice to clause 3 (conditions) and clause 9 (representations and warranties) (a) obtain or cause to be obtained, maintain or cause to be maintained in full force and effect at the time that the same are required and promptly renew or cause to be renewed and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every Authorisation which are applicable to the Borrower and the Rig, the Project and the transactions contemplated hereby and all Authorisations which the Borrower is required to obtain and maintain under the terms of the Assigned Documents in order to continue the performance and operation of the Rig at the Approved Location; and (b) if requested by the Facility Agent deliver to the Facility Agent a report in relation to the status of the Authorisations and any qualifications, limitations or restrictions thereon, provided that the Borrower shall only be obliged to deliver one such report each year, unless a Default shall have occurred and be continuing, in which case the Borrower shall deliver a further report if so requested by the

 

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Facility Agent; and (c) do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance, validity, legality, priority and enforceability of all its obligations under this Agreement, the Facility Documents, the Assigned Documents and the Project Documents to which the Borrower or the Head Charterer is party; and (d) if so requested by the Charterer, provide to the Charterer any documentation in the possession or control of the Borrower or the Head Charterer as the Charterer may reasonably require in support of the Charterer’s application for any renewal or extension of the ROF or other Central Bank consent required in respect of the Charter in accordance with clause 4.8 thereof;

 

10.2.3   Use of proceeds

use the Advances under this Agreement exclusively for the purpose specified in clause 1.1 (purpose) (which shall include, for the avoidance of doubt, the reimbursement of any Interim Payments) and not use the proceeds of any Advance for an illegal purpose or otherwise not in compliance with any applicable law;

 

10.2.4   Pari passu

ensure that at all times any unsecured and unsubordinated claims of a Beneficiary against it under the Facility Documents shall rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

 

10.2.5   Information concerning the Project

furnish the Facility Agent promptly with the information specified in clauses 14.2.5 and 14.2.6 of the Deed of Proceeds and Priorities in accordance with the terms thereof;

 

10.2.6   Action of Borrower

at any time after the occurrence of an Event of Default which is continuing or after the whole principal amount of the Loan has become due and payable pursuant to any provision of the Facility Documents, the Borrower shall from time to time take such action, make such requests or demands and give such notices and certificates (including, without limitation, any lawful demand for payment under any of the Transaction Documents) as the Facility Agent or the Security Trustee may reasonably request in order to enforce or preserve any rights, remedies or claims (a) of any Beneficiary under any Transaction Document to which the Borrower is a party or (b) which is the subject of any Security Document to which the Borrower is a party and shall not, without the prior written consent of the Agents, take any steps to enforce or exercise, and shall take such reasonable steps as the Facility Agent or the Security Trustee may direct to enforce or exercise, any rights, remedies, powers and privileges under the Assigned Documents or in respect of the Rig or under any of the Security Documents;

 

10.2.7   Compliance with laws and regulations

comply with the terms and conditions of all laws (including without limitation Environmental Laws), regulations, agreements, licences and concessions to which it may be subject and which are required in connection with the Project or which are necessary for the operation of the Rig, its systems and equipment and which are material to the carrying on of its business;

 

10.2.8   Environmental claims

promptly upon becoming aware of the same, inform the Facility Agent in writing of:

 

  (a) any Relevant Environmental Claim in relation to it; and

 

  (b) any facts or circumstances which are reasonably likely to result in any Relevant Environmental Claim being commenced or threatened against it;

 

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10.2.9   Accounts

 

  (a) open no bank accounts other than (i) the Proceeds Account, (ii) the Project Account, (iii) the Earnings Account, (iv) the Debt Service Reserve Account, and (v) such other accounts as from time to time may be approved by the Facility Agent;

 

  (b) maintain no bank accounts other than (i) the Proceeds Account, (ii) the Project Account, (iii) the Earnings Account (iv) the Debt Service Reserve Account, and (v) any other account(s) as may be approved by the Facility Agent as contemplated in sub-paragraph (v) of paragraph (a) of this clause 10.2.9;

 

  (c) maintain each of the Proceeds Account, the Earnings Account, the Project Account and the Debt Service Reserve Account with the Account Bank;

 

  (d) use all reasonable endeavours to procure that the Charterer and any other relevant person shall pay all Charter Rate and other Earnings into the Earnings Account and the Borrower further agrees that it will procure that all payments of Charter Rate and other Earnings which are received by it, the Head Charterer or any other member of the Group shall be paid into the Earnings Account for application in accordance with clause 5 of the Deed of Proceeds and Priorities;

 

  (e) pay or procure the payment of all compensation from time to time during the Security Period received in respect of any requisition of the Rig for hire into the Earnings Account for application in accordance with clause 5 of the Deed of Proceeds and Priorities;

 

  (f) pay or procure the payment of any Loss of Earnings Proceeds into the Earnings Account for application in accordance with clause 5 of the Deed of Proceeds and Priorities;

 

  (g) procure the payment of any moneys received or receivable by the Borrower from the Hedging Provider under or pursuant to the Hedging Agreements into the Earnings Account;

 

  (h) pay or procure the payment of the proceeds of any confiscation and expropriation insurances (if any) in respect of the Rig into the Proceeds Account;

 

  (i) do nothing which may prevent the Security Trustee and the Facility Agent applying all Charter Rate and other Earnings in accordance with the Deed of Proceeds and Priorities and in repayment or prepayment (as applicable) of the Loan, in accordance with clause 8.7 or clause 8.8 hereof and clause 5 and/or 9 of the Deed of Proceeds and Priorities, as the case may be;

 

  (j) pay (A) proceeds in respect of any disposal of the whole or part of the Rig, (B) Total Loss Proceeds and (C) the whole amount of any other Insurance Proceeds (excluding Loss of Earnings Proceeds) where the amount of those proceeds exceeds the Casualty Amount and (following the occurrence of an Event of Default) any Insurance Proceeds less than the Casualty Amount and (D) guarantee payments in respect of the Rig Rights, or procure that all such proceeds are paid, into the Proceeds Account for application in accordance with clause 6 of this Agreement and/or clauses 5, 6 or 9 (as applicable) of the Deed of Proceeds and Priorities; and

 

  (k) procure that all Liquidated Damages are paid into the Proceeds Account for application in accordance with clause 9 of the Deed of Proceeds and Priorities;

 

10.2.10   Invoices

ensure that all invoices and billing documents for the account of the Charterer are submitted promptly by the Head Charterer each month in accordance with the provisions of clause 8 of the Charter;

 

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10.2.11   Disputes and litigation

promptly upon becoming aware of the same, inform the Facility Agent of the commencement of any litigation, arbitration or administrative proceedings against the Borrower, or if any such proceedings are threatened against the Borrower;

 

10.2.12   Taxes

promptly upon becoming aware of the same, notify the Facility Agent of the imposition or the proposed levy of any Taxes (by withholding or otherwise) on any payment to be made by the Borrower under any Facility Document to which it is a party;

 

10.2.13   Relevant Substances

promptly upon becoming aware of the same, notify the Facility Agent of (a) the deposit or disposal by or from the Rig of any Relevant Substance in the Environment and (b) any storage, treatment, importation, exportation, transportation, processing, manufacture, usage, collection, sorting or production of any Relevant Substance which is carried out in circumstances which in each case are likely to result in an Environmental Claim against the Borrower, the Head Charterer, the Sponsor (but only insofar as the Environmental Claim is in connection with the Rig) or the Rig;

 

10.2.14   Environmental audits

provide to the Facility Agent full details of any third party inspections, investigations, studies, (including internal studies in relation to specific environmental risks, if any) audits, tests, reviews or other analyses in relation to Environmental Matters relating to the Borrower, the Head Charterer, the Sponsor (but only insofar as the relevant Environmental Matter is in connection with the Rig) or the Rig and all Environmental Licences;

 

10.2.15   Notification of Permitted Amendment

from time to time, upon request by the Facility Agent, notify the Facility Agent in the event of any Permitted Amendment;

 

10.2.16   Intellectual Property

 

  (a) preserve and maintain the subsistence and validity of the Intellectual Property necessary for its business;

 

  (b) use reasonable endeavours to prevent any infringement in any material respect of its Intellectual Property;

 

  (c) make registrations and pay all registration fees and taxes necessary to maintain its Intellectual Property in full force and effect and record its interest in that Intellectual Property;

 

  (d) not use or permit its Intellectual Property to be used in a way or take any step or omit to take any step in respect of that Intellectual Property which may materially and adversely affect the existence or value of the Intellectual Property or imperil its right to use such property; and

 

  (e) not discontinue the use of its Intellectual Property;

 

10.2.17   Money laundering

in relation to the borrowing of the Advances, the performance and discharge of its obligations and liabilities under this Agreement or any of the Facility Documents to which it is a party and the transactions and other arrangements effected or contemplated by this Agreement or any of the Facility Documents to which it is a party, act for its own account and the foregoing will not

 

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involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities);

 

10.2.18   Ownership

procure that Constellation continues to directly own one hundred per cent. (100%) of the issued share capital of the Borrower, unless and until an Approved Transfer has taken place in relation to the Borrower, in which case Constellation shall continue to directly own not less than fifty per cent. (50%) of the Borrower’s issued share capital;

 

10.2.19   Further assurance

promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Trustee may reasonably specify (and in such form as the Security Trustee may reasonably require in favour of the Security Trustee or its nominee(s)):

 

  (a) to perfect the Security created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Trustee or the Beneficiaries provided by or pursuant to the Facility Documents or by law;

 

  (b) to confer on the Security Trustee or confer on the Beneficiaries Security over any property and assets of any Security Party located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Security Documents; and/or

 

  (c) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.

The Borrower shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Trustee or the Beneficiaries by or pursuant to the Security Documents.

 

10.3   Further Covenants

The Borrower shall not and (in the case of clause 10.3.1, 10.3.2, 10.3.7, 10.3.14 and 10.3.17) shall procure that none of the other Security Parties shall without the prior written consent of (i) in the case of clause 10.3.1 and clause 10.3.17(a), the Facility Agent acting with the consent of all of the Lenders (acting reasonably) or (ii) in the case of clauses 10.3.2 to 10.3.16 (inclusive) and clause 10.3.17(b) to 10.3.17(d), the Facility Agent acting with the consent of the Majority Lenders and after consultation with all the Lenders (acting reasonably):

 

10.3.1   Cancellation and termination

determine, cancel, rescind or otherwise terminate any Project Document or any other Transaction Document to which it is or becomes a party or consent to or accept any determination, cancellation, rescission or termination thereof, other than (a) pursuant to the express terms thereof, (b) at the request of the Security Trustee acting on behalf of the Lenders, (c) in the fulfilment of its obligations under clause 7.5.6 of the General Assignment, or (d) by the Sponsor or Constellation in fulfilment of their respective obligations under clauses 9.3 and/or 11.3.3 of the Deed of Undertaking;

 

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10.3.2   No prejudicial action

do anything and shall not take any action against any person (including, without limitation, any Insolvency Official or similar officer of, or any creditor of, the Borrower or any other person claiming through, under or in place of the Borrower) which has or is reasonably likely to have the effect of prejudicing any Encumbrance created by any Security Document in favour of any Beneficiary;

 

10.3.3   Other agreements

enter into any contract or agreement with any person and will not otherwise create or incur any liability to any person other than (i) as required in the fulfilment of the Borrower’s obligations to the Lenders and as provided for in, or as permitted by, the Transaction Documents (including, for the avoidance of doubt, liabilities or payments which are permitted by this Agreement and clause 14.3.4 of the Deed of Proceeds and Priorities), and arrangements entered into as a result thereof and each other document required to be executed and delivered by it in accordance with the provisions hereof or thereof and (ii) such overhead expenses as may arise in the ordinary course of carrying on its business in compliance with clause 10.2;

 

10.3.4   No disposal

other than pursuant to, or as permitted by, the terms of the Transaction Documents it shall not sell, transfer, assign, pledge, charter, discount or otherwise dispose of or permit any third party right to arise over or in relation to any of its present and future business, undertaking, assets, rights and revenues, including, but not limited to, its title, rights or interests in or to the Rig or any of its assets or property the subject or purported to be the subject of any Security Document and shall not otherwise deal with, and shall not agree or attempt or purport to agree or create or permit to arise or subsist any of the same or cease to exercise direct control over the same, whether by one or a series of transactions, related or otherwise;

 

10.3.5   Indebtedness

at any time after the date of this Agreement, incur, assume or undertake any indebtedness, issue any guarantees or make, incur, assume or undertake any other financial commitment, obligation or liability whatsoever (except as permitted by and in accordance with the Bareboat Charter or any other Facility Document to which it is a party (including in respect of any Interim Payment and any Equity which is provided to the Borrower as contemplated by the Facility Documents));

 

10.3.6   [intentionally omitted]

 

10.3.7   Merger or transfer

enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction or transfer all or any of its business, undertaking, assets, rights and/or revenues to any other person;

 

10.3.8   Encumbrances

create, purport or attempt to create or permit to be created any Encumbrance (other than Permitted Encumbrances) (a) over any of its business, undertaking, assets, rights and revenues or (b) over any right, title, interest and benefit under or in respect of the Bareboat Charter;

 

10.3.9   No obligations or assets

 

  (a) undertake, incur or assume any obligation or liability whatsoever other than its obligations and liabilities:

 

  (i) pursuant to this Agreement and the other Transaction Documents to which it is party; and

 

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  (ii) in respect of any Interim Payment or any Equity which is provided to the Borrower as contemplated by the Facility Documents; and

 

  (b) not acquire any assets, rights or revenues other than its Assigned Property;

 

10.3.10   Other business

undertake or become involved in any business whatsoever other than as contemplated by the Transaction Documents;

 

10.3.11   Subsidiaries

acquire or establish any Subsidiaries or hold any share or stock or interest in any corporate entity of any kind or in any partnership;

 

10.3.12   No Borrowings

incur, assume or undertake any liability or obligations for or in respect of any Borrowed Money other than pursuant to the Facility Documents, save for in respect of any Interim Payment or any Equity which is provided to the Borrower as contemplated by the Facility Documents;

 

10.3.13   Sharing of Earnings

save as required by the terms of the Facility Documents, enter into or purport or agree to enter into any agreement or arrangement whereby any Earnings or Proceeds or any other amounts payable under the Bareboat Charter or Charter may be shared with or secured in favour of any other person;

 

10.3.14   No winding up

take any corporate or other action or commence any legal proceedings for its winding-up, dissolution, administration or reorganisation or for the appointment of an Insolvency Official of it or any of its assets or revenues;

 

10.3.15   Material Contracts

enter into any Material Contract unless it provides for a fixed price and fixed date of completion and is on terms and with a counterparty acceptable to the Facility Agent and unless the Borrower has provided a certified copy of that Material Contract to the Facility Agent and the Borrower shall procure that any Material Contract shall be entered into either by the Borrower or by the Head Charterer;

 

10.3.16   Rig and Charter Acceptance

accept delivery of the Rig under or pursuant to the Construction Contract or tender the Rig for delivery under or pursuant to the Bareboat Charter, unless and until:

 

  (a) the Technical Advisor has confirmed that the Rig complies with the Specifications, complies with the requirements of the Construction Contract and is otherwise in a condition suitable for acceptance; and

 

  (b) the Facility Agent, or its duly authorised representative, shall have received the documents and evidence specified in Part 4 of Schedule 3, in form and substance satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders or, in the case of the documents and evidence specified in paragraphs 3 and 6(g) thereof (if so required), in form and substance satisfactory to all the Lenders);

and the Borrower shall procure that the Head Charterer shall not, and that the Sponsor shall not, tender the Rig for acceptance under the Charter or the Services Agreement unless and until the Technical Adviser has confirmed that the Rig complies with all the requirements of the Charter and the Services Agreement, and is otherwise in a condition suitable for tendering for acceptance by the Charterer; and

 

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10.3.17   Amendment

(and shall procure that no Security Party shall) amend, vary, modify, supplement, restate, novate or replace or agree or consent to any amendment, modification, supplement, variation, or any restatement, novation or replacement of, or grant any waiver or release under or in respect of:

 

  (a) a Hedging Agreement;

 

  (b) the Charter, the Services Agreement or the Sub-Contract Agreement (other than pursuant to the definition of “Permitted Amendment”);

 

  (c) the Project Documents other than those referred to in paragraphs (a) and (b) above (other than amendments of the nature described in the definition of “Permitted Amendment”); or

 

  (d) any other Transaction Documents to which the Borrower is or becomes a party (other than pursuant to the definition of “Permitted Amendment”).

 

10.4   Technical Adviser

The Borrower shall do all that is necessary to enable the Technical Adviser to fulfil its duties and conduct the review of the Project required pursuant to the scope of work specified in clause 20 and to report to the Facility Agent (on behalf of the Lenders) with its conclusions and its technical reports.

 

11   Events of Default

 

11.1   Each of the events and circumstances set out below is an Event of Default (whether or not caused by any reason outside the control of the Borrower):

 

11.1.1   Non-payment: the Borrower or any other Security Party fails to pay any sum due from it under this Agreement or any Facility Document in the currency, at the time and in the manner stipulated herein or therein and such non payment is not remedied within five (5) Banking Days of the due date thereof; or

 

11.1.2   Breach of Insurance obligations: the Borrower or any other Security Party commits any breach of or omits to observe any of the covenants, obligations or undertakings expressed to be assumed by it under clause 9 of the General Assignment or the Borrower or any other Security Party fails or omits to comply with any requirements of the protection and indemnity association or other insurer with whom the Rig is entered for insurance or insured against protection and indemnity risks (including all pollution risks) to the effect that any cover (including without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where the Rig operates) is or may be liable to cancellation, qualification or exclusion at any time or the Borrower or any other Security Party fails to effect or procure the renewal of the Insurances by the date falling five (5) days prior to the expiry thereof, or the Security Trustee gives notice pursuant to clauses 9.2, 9.3, 9.6 or 9.10 of the General Assignment withdrawing its approval of the Insurances maintained or any insurer, and such Insurances are or such insurer is not replaced on terms acceptable to the Security Trustee acting with the consent of and after consultation with the Majority Lenders having due regard to the requirements of clause 9 of the General Assignment within seven (7) days of the Security Trustee serving its notice pursuant to clauses 9.2, 9.3, 9.6 or 9.10 of the General Assignment; or

 

11.1.3  

Breach of obligations in relation to the Project Account, Proceeds Account, Earnings Account or the Debt Service Reserve Account: the Head Charterer or the Borrower commits any breach of or omits to observe any of the covenants, obligations and undertakings expressed to be assumed by it under the Accounts Pledge or there occurs any breach of clause 10.2.9 of this

 

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  Agreement or any moneys standing to the credit of the Project Account or the Proceeds Account or the Debt Service Reserve Account or the Earnings Account are or become subject to any attachment or similar type of order unless the Facility Agent, acting with the consent of and after consultation with the Majority Lenders, (i) is satisfied that such attachment or similar order is frivolous or vexatious, and such attachment or similar order is lifted or released within ten (10) Banking Days, (ii) determines that such breach is not material, or (iii) determines that such breach is capable of remedy, and the applicable breach is remedied to the satisfaction of the Facility Agent within ten (10) Banking Days of the occurrence thereof; or

 

11.1.4   Breach of other obligations: the Borrower or any other Security Party commits any breach of or omits to observe any of the covenants, obligations or undertakings expressed to be assumed by it under this Agreement or the Facility Documents (other than those referred to in clauses 11.1.1, 11.1.2 and 11.1.3 above or clauses 11.1.31, 11.1.32 and 11.1.33 below) unless the Facility Agent, acting with the consent of and after consultation with the Majority Lenders, (i) determines that such breach is not material, or (ii) determines that such breach is capable of remedy and the applicable breach is remedied to the satisfaction of the Facility Agent by the expiry of any applicable period or, where no remedy period is prescribed by this Agreement or the relevant Facility Document, the date falling fifteen (15) days after the date on which the Facility Agent notified the Borrower or the applicable Security Party of such default; or

 

11.1.5       

 

  (a) Breach of Charterer Acknowledgement (where the same is obtained from the Charterer): the Charterer commits any breach of or omits to observe any of the obligations or undertakings assumed by it under the Charterer Acknowledgement which is considered by the Facility Agent acting with the consent of and after consultation with the Lenders to be material and, in respect of any such breach or omission which in the opinion of the Facility Agent (acting with the consent of and after consultation with the Lenders) is capable of remedy, such action as the Facility Agent acting with the consent of and after consultation with the Lenders may require (including but not limited to the arrangement of alternative security on terms acceptable to the Lenders) shall not have been taken within thirty (30) days of the Facility Agent notifying the Borrower of such default; or

 

  (b) Breach of Builder Acknowledgement: the Builder (or either of them) commit any breach of or omits to observe any of the obligations or undertakings assumed by it under the Builder Acknowledgement which is considered by the Facility Agent acting with the consent of and after consultation with the Lenders to be material and, in respect of any such breach or omission which in the opinion of the Facility Agent (acting with the consent of and after consultation with the Lenders) is capable of remedy, such action as the Facility Agent acting with the consent of and after consultation with the Lenders may require (including but not limited to the arrangement of alternative security on terms acceptable to the Lenders) shall not have been taken within thirty (30) days of the Facility Agent notifying the Borrower of such default; or

 

11.1.6       

 

  (a) Initial Misrepresentation: any representation or warranty on the part of the Borrower or any other Security Party made in or pursuant to this Agreement or any of the Facility Documents or in any notice, certificate or statement referred to in or delivered under this Agreement or any of the Facility Documents, or deemed to be made therein or repeated on the Closing Date is or proves to have been incorrect or misleading in any material respect when made or when deemed to be made or repeated; or

 

  (b)

Repeating Representation: any Repeating Representation on the part of the Borrower or the Head Charterer deemed to be made or repeated on any date other than the date of the Facility Document in which that Repeating Representation is made or the Closing Date is or proves to have been incorrect or misleading when deemed to be made or repeated unless the Facility Agent, acting with the consent of and after consultation with the Majority Lenders, (i) determines that such incorrectness or misleading nature is not material, or (ii) determines that such incorrectness or misleading nature is capable of

 

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  remedy and the applicable incorrectness or misleading nature is remedied to the satisfaction of the Facility Agent by the expiry of any applicable period (or, where no remedy period is prescribed by the terms of the relevant Repeating Representation, the date falling fifteen (15) days after the date on which the Facility Agent notified the Borrower or the applicable Security Party of such incorrectness or misleading nature); or

 

  (c) Continuing Misrepresentation: any Continuing Representation on the part of either Undertaking Party would, if made or repeated on any date during the Security Period, be incorrect or misleading by reference to the facts and circumstances existing on that date unless (save for the representations and warranties contained in clauses 7.15.2, 7.16.2 and 17.19 of the Deed of Undertaking, which shall constitute an Event of Default if and whenever the Material Adverse Effect test referred to therein is applicable and is satisfied) the Facility Agent, acting with the consent of and after consultation with the Majority Lenders, (i) determines that such incorrectness or misleading nature is not material, or (ii) determines that such incorrectness or misleading nature is capable of remedy and the applicable incorrectness or misleading nature is remedied to the satisfaction of the Facility Agent by the expiry of any applicable period (or, where no remedy period is prescribed by the terms of the relevant Continuing Representation, the date falling fifteen (15) days after the date on which the Facility Agent notified the Borrower or the applicable Security Party of such incorrectness or misleading nature); or

 

11.1.7   Legal process:

 

  (a) any judgment or judicial order is made against the Head Charterer, the Borrower, the Sponsor, Constellation or any BVI Company and such judgment or judicial order is not stayed or complied with by the date falling, in the case of the Head Charterer, the Borrower, Constellation or any BVI Company, seven (7) days thereafter or, in the case of the Sponsor, fourteen (14) days thereafter and such judgment or judicial order imposes a liability or obligation the cost of complying with which is or will be in excess of (in the case of the Sponsor and Constellation (but not the Head Charterer, the Borrower or any BVI Company to which no threshold shall apply) ten million Dollars ($10,000,000) (or the equivalent in any other currency); or

 

  (b) a creditor attaches, or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of the Head Charterer, the Borrower, the Sponsor, Constellation or any BVI Company and in each case such attachment, possession, distress, execution, sequestration or other process constitutes a Material Adverse Effect and is not discharged by the date falling seven (7) days thereafter; or

 

11.1.8   Insolvency: any Insolvency Event occurs in relation to any of the Head Charterer, the Borrower, the Sponsor, Constellation, any BVI Company and the Charterer; or

 

11.1.9   Qualification of financial statements: the auditors of any of the Head Charterer, the Borrower, the Sponsor and Constellation qualify their report on the audited financial statements of such company or entity in any way whatsoever considered by the Facility Agent acting on behalf of and after consultation with the Majority Lenders (acting reasonably) to be material and such qualification is not remedied within thirty (30) days from the date of such qualification; or

 

11.1.10   Cessation of business: the Borrower or any other Security Party suspends or ceases or threatens to suspend or cease to carry on its business; or

 

11.1.11   Seizure: the Rig or all or a material part of the assets forming any other part of the Collateral is seized, nationalised, expropriated, confiscated or compulsorily acquired by or under the authority of any government provided however that an event which constitutes or would, with the giving of notice or effluxion of time, constitute a Total Loss shall not constitute an event of default under this clause 11.1.11 unless and until the Borrower has failed to comply with its obligations in respect of such Total Loss under clause 6.5 hereof, in each case within the time period allowed therefor; or

 

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11.1.12   Change of Control: the Group Owners cease to own (directly or indirectly) one hundred per cent. (100%) of the voting shares in the capital of any of the Parent Sponsor, the Sponsor, Constellation, any of the BVI Companies and the Borrower, (provided that (i) an Approved Transfer in respect of the Head Charterer or (ii) the sale of any issued share capital permitted in accordance with clause 14.2.19(c) of the Deed of Proceeds and Priorities shall not constitute an event of default under this clause 11.1.12) or any breach of clause 10.2.18 occurs; or

 

11.1.13   Repudiation: any party thereto (other than the Charterer and any party to any Project Document containing Rig Rights and Guarantee Rights as listed in Schedule 7 of this Agreement (other than any Security Party)) repudiates this Agreement, any of the Facility Documents or any of the Project Documents or does or causes or permits to be done any act or thing evidencing an intention by it to repudiate this Agreement, any of the Facility Documents or any of such Project Documents; or

 

11.1.14   Encumbrances: any Encumbrance (other than a Permitted Encumbrance) in respect of the Rig or any other asset or property forming part of the Collateral becomes enforceable; or

 

11.1.15   Material events: any other event occurs or circumstance (other than any event or circumstance expressly contemplated by clauses 11.1.1 to 11.1.14 above or 11.1.16 to 11.1.33 below) arises which, in the reasonable opinion of the Facility Agent acting with the consent of and after consultation with the Majority Lenders, constitutes a Material Adverse Effect and, if remediable, such event or circumstance has not been remedied to the satisfaction of the Facility Agent (acting with the consent of and after consultation with the Majority Lenders) by the date falling thirty (30) days after the occurrence of such event or circumstance; or

 

11.1.16   Litigation: any litigation, arbitration or administrative proceeding is commenced or threatened against any Security Party (or their respective assets) which in the reasonable opinion of the Facility Agent acting with the consent of and after consultation with the Majority Lenders (following notification of such proceeding by the Borrower in accordance with clause 10.2.11 of this Agreement or by the applicable Security Party in accordance with the equivalent provisions in the Facility Documents to which the affected Security Party is a party), (i) is likely to be adversely determined and (ii) if adversely determined is likely to constitute a Material Adverse Effect; or

 

11.1.17   Arrest: the Rig is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Head Charterer or the Borrower or the Sponsor in circumstances other than those described in clause 11.1.11 and the Borrower (a) fails to provide a bond or other surety sufficient to procure the release of the Rig within a period of seven (7) days after such arrest, confiscation, seizure, impounding, forfeiture or detention and (b) fails to procure the release of the Rig within a further period of seven (7) Banking Days (or such longer period as the Facility Agent may agree, acting with the consent of and after consultation with the Security Trustee and the Majority Lenders) after the posting of the bond or other surety; or

 

11.1.18   Registration: the registration of the Rig under the laws and flag of the Flag State is cancelled or terminated without the prior consent of the Security Trustee acting with the consent of and after consultation with the Majority Lenders and the Rig is not registered under the laws and flag of a jurisdiction acceptable to the Security Trustee acting with the consent of and after consultation with the Majority Lenders within a period of thirty (30) days after such cancellation or if the registration of the Rig is not renewed at least thirty (30) days prior to the expiry of such registration, provided however that nothing in this clause 11.1.18 shall operate to override the provisions of clauses 6.4.1 and 6.4.2 in relation to the Mortgage unless a new mortgage is registered over the Rig at the same time as the re-registration of the Rig is effected and the validity, priority and enforceability of the Mortgage is not affected in any way during any such period where the Rig is not registered; or

 

11.1.19  

Unrest: the Flag State becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means if, in any such case, such event could, in the opinion of the Security Trustee acting with the consent of and after consultation with the Majority Lenders be reasonably expected to have a material adverse effect on the security constituted by

 

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  the Mortgage and the General Assignment or Sponsor Assignment and the Rig is not registered under the laws and flag of a comparable jurisdiction to the Flag State acceptable to the Security Trustee acting with the consent of and after such consultation with the Majority Lenders within a period of thirty (30) days after the outbreak of hostilities or the occurrence of such civil war or seizure of power and a new mortgage is registered over the Rig at the same time as the re-registration of the Rig is effected and the validity, priority and enforceability of that Mortgage and the General Assignment or Sponsor Assignment are not affected in any way during any such period where the Rig is not registered; or

 

11.1.20   Project Performance: any Security Party fails to perform or comply with its obligations and liabilities under any of the Project Documents to which it is party and such failure is not remedied (save in circumstances where such failure is waived by the relevant Project Counterparty, provided that Project Counterparty is not itself a Security Party) on or prior to the date falling thirty (30) days before the date on which the Project Counterparty to the relevant Project Document will become entitled to terminate that Project Document by reason of such failure and, in the opinion of the Facility Agent acting with the consent of and after consultation with the Majority Lenders, acting reasonably, such termination would have a Material Adverse Effect; or

 

11.1.21   Abandonment of Rig: the Rig is abandoned by any of the Security Parties and the Loan together with all interest accrued and payable thereon have not been prepaid in full by the date falling five (5) Banking Days after the occurrence of such abandonment provided that this clause 11.1.21 shall not apply to any abandonment of the Rig if (a) that abandonment is necessary to ensure the health and safety of the crew, and (b) the crew of the Rig return to and have control of the Rig on or prior to the date falling two (2) days after the date abandonment is no longer necessary to ensure the health and safety of the crew; or

 

11.1.22   Force Majeure: a Force Majeure Event occurs in accordance with clause 13 of the Charter and such Force Majeure Event continues for a period of sixty (60) days and the Charter is not terminated pursuant to clause 13.5 thereof within a period of ten (10) days after the expiry of such sixty (60) day period; or

 

11.1.23   Project Documents: any Project Document is terminated, suspended or cancelled without the prior written approval of the Facility Agent acting on the instructions of all the Lenders; or

 

11.1.24   Cross-default: (A) any Borrowed Money of any Security Party (i) is not paid when due (including payment due on acceleration) or (ii) becomes due and payable prior to the date when it would otherwise have become due (whether following a declaration or the occurrence of an event of default under the relevant agreement or instrument constituting the same), or (B) any creditor of a Security Party becomes entitled to declare any Borrowed Money of that Security Party so due and payable or becomes entitled to require cash collateralisation or security for any such Borrowed Money consequent upon the occurrence of an event of default (or equivalent event) under or pursuant to the applicable agreement or instrument, or (C) any other facility or commitment available to a Security Party relating to Borrowed Money of that Security Party is withdrawn, suspended or cancelled by reason of any default (howsoever described) of the company concerned unless that Security Party can demonstrate to the satisfaction of the Lenders that such withdrawal, suspension or cancellation will not affect or prejudice in any way the ability of such Security Party to pay its debts as they fall due and to fund its business, in each case if the relevant Borrowed Money, either alone or aggregated with any other Borrowed Money in relation to which any of the events in the foregoing provisions of this clause 11.1.24 has occurred, is of an amount in excess of, in the case of the Sponsor and Constellation (but not the Head Charterer or the Borrower to which no threshold shall apply) ten million Dollars ($10,000,000) (or the equivalent in any other currency) and in the case of (A)(i) or (ii) such amount remains unpaid for a period of five (5) Banking Days after it becomes due; or

 

11.1.25   Financial covenants: there is any failure to comply with any Financial Covenant on any Financial Covenant Measurement Date; or

 

11.1.26   Charter Date of Acceptance: the Charter Date of Acceptance does not occur on or prior to 13 June 2009; or

 

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11.1.27   [intentionally omitted]

 

11.1.28   Charter Termination:

 

  (a) the Charterer (i) exercises its rights pursuant to (A) clause 11.1 of the Charter to cancel, repudiate or terminate the Charter or (B) clause 11.1 of the Services Agreement to cancel, repudiate or terminate the Services Agreement or (ii) purports to cancel, repudiate or terminate the Charter; or

 

  (b) the Charter is otherwise terminated for any reason (including, without limitation, by virtue of the application of clause 11.3 of the Charter),

in each case otherwise than as a consequence of the occurrence of (i) a Force Majeure Event or (ii) at the request of the Security Trustee acting on behalf of the Lenders by the Borrower in the fulfilment of its obligations under clause 7.5.6 of the General Assignment or by the Sponsor in the fulfilment of its obligations under clause 8.2.20 or clause 9.3 of the Deed of Undertaking; or

 

11.1.29   Non-Payment Events: by the date falling thirty (30) days or, if the Majority Lenders so agree, on the request of the Borrower, the date falling sixty (60) days after the occurrence of any Non-Payment Event, the Charterer has not either (i) rectified the Non-Payment Event and paid any shortfall in full or (ii) reached a settlement with the Borrower as to any amount in dispute and paid that amount in full and in either case the Charterer has not resumed payment in full and the Facility Agent has not received all amounts due to the Lenders at the relevant time; or

 

11.1.30   Project Documents:

 

  (a) any event or circumstance occurs under any of the Project Documents which entitles any party thereto to terminate that Project Document or any event of default occurs under any of the Project Documents which is considered by the Facility Agent (acting with the consent of and after consultation with the Majority Lenders) to be material (excluding for this purpose events of default which constitute a Non-Payment Event which shall be regulated by clause 11.1.29 above, events of default under any documents comprising the Rig Rights as more particularly described in Schedule 7 and events of default which are waived by the relevant Project Counterparty, provided that Project Counterparty is not itself a Security Party) and such event or circumstance or, as the case may be, event of default is not remedied within thirty (30) days after the occurrence of the same; or

 

  (b) any other event occurs or circumstance arises which, in the opinion of the Facility Agent (acting with the consent of and after consultation with the Majority Lenders acting reasonably), (i) constitutes a material adverse change in relation to the Project and/or any Project Document and (ii) is likely to affect adversely the ability of the Borrower or the Head Charterer to perform its material obligations under or otherwise to comply with the material terms of this Agreement and any of the Facility Documents and in each case such event of default or material adverse change is not remedied within thirty (30) days after the occurrence of such event or change; or

 

11.1.31   Project Cost Over Run and Delays:

 

  (a) the Project Cost Over Run exceeds or will exceed thirty five million Dollars ($35,000,000); or

 

  (b) the Technical Adviser reports to the Facility Agent (after consultation with the Borrower) that (a) any Budget or update of any Budget is inaccurate in any material respect or does not reflect the existing and/or future Project Cost incurred or to be incurred in respect of the Project, or (b) a delay in the Completion Date past the dates referred to in clause 11.1.26 is likely to occur; or

 

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  (c) the amount claimed by the Borrower in relation to Actual Operating Costs exceeds the actual amount of Actual Operating Costs, and any such difference is not paid into the Earnings Account within fifteen (15) days after the Facility Agent (acting on the basis of any information provided by the Technical Adviser pursuant to Clause 20.4) gives notice to the Borrower requiring such payment.

 

11.1.32   Letters of Credit: any breach occurs of the provisions of clause 9.1 of the Deed of Undertaking;

 

11.1.33   Conditions Subsequent: the Borrower commits any breach of the undertaking expressed in clause 3.10 hereof.

 

11.2   Borrower acknowledgement

The Borrower acknowledges and agrees that the occurrence of an Event of Default shall be a breach of condition which the Lenders are entitled to treat as a repudiation by the Borrower of this Agreement and the Facility Agent (on behalf of the Lenders) shall be entitled to give a notice to the Borrower in accordance with clause 11.3 below.

 

11.3   Acceleration

The Facility Agent may, and if so requested by the Majority Lenders shall, without prejudice to any other rights of the Beneficiaries, at any time after the happening of an Event of Default which is continuing by notice to the Borrower:

 

11.3.1   declare that the obligation of each Lender to make its Commitment available shall be terminated, whereupon the Total Commitments shall be reduced to zero forthwith; and/or

 

11.3.2   declare that the Loan and all interest and Commitment Fee accrued and all other sums payable under this Agreement and the Facility Documents have become immediately due and payable or have become due and payable on demand, whereupon the same shall, immediately or in accordance with the terms of such notice, become so due and payable; and/or

 

11.3.3   declare that the Security Documents (or any of them) have become enforceable whereupon the same shall be enforceable; and/or

 

11.3.4   exercise or direct the Security Trustee to exercise any or all of its rights, remedies, powers or discretions under the Facility Documents (but subject always to the terms of the Charterer Acknowledgement (if executed) and to the terms of the Builder Acknowledgement).

On or at any time after the making of any such declaration, the Facility Agent shall be entitled, to the exclusion of the Borrower (and without prejudice to clause 5.3 (interest for late payment)), to select the duration of Interest Periods.

 

11.4   Demand basis

If, pursuant to clause 11.3, the Facility Agent declares the Loan to be due and payable on demand then the Facility Agent may (and, if so instructed by the Majority Lenders, shall) at any time by written notice to the Borrower (a) call for repayment of the Loan on such date as may be specified in such notice, whereupon the Loan shall become due and payable on the date so specified together with all interest and fees and Commitment Fee accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

 

12   Indemnities

 

12.1   Miscellaneous indemnities

The Borrower shall on demand indemnify each Beneficiary, without prejudice to any of their other rights under this Agreement and the Facility Documents, against any loss (including loss of Margin, but only loss of Margin in respect of the actual Contribution of each Lender to the Loan at the relevant time) or expense which such Beneficiary shall certify (subject always to clause 8.10 (Certificates conclusive)) as sustained or incurred by it as a consequence of:

 

12.1.1   any default in payment by any Security Party of any sum under this Agreement or any of the Facility Documents when due;

 

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12.1.2   subject to any exclusion in the final paragraph of clause 12.3.1 below, the occurrence of any other Default;

 

12.1.3   the exercise by the Security Trustee of any or all of its rights under or pursuant to the Facility Documents;

 

12.1.4   if applicable, any repayment or prepayment of all or part of the Loan being made otherwise than on an Interest Payment Date relating to the part of the Loan repaid or prepaid; or

 

12.1.5   any Advance not being made for any reason (excluding any default by a Beneficiary) after a Drawdown Notice has been given,

including, in any such case, but not limited to, any loss or expense sustained or incurred by such Beneficiary in maintaining or funding all or any part of its Contribution or Commitment or in liquidating or re-employing deposits from third parties acquired or contracted for to fund all or any part of its Contribution or Commitment or any other amount owing to such Beneficiary.

 

12.2   Currency of account; currency indemnity

No payment by the Borrower under this Agreement or any of the Facility Documents which is made in a currency other than the currency in which such payment is required to be made pursuant to this Agreement or the applicable Facility Document (“Contractual Currency”) shall discharge the obligation in respect of which it is made except to the extent of the net proceeds in the Contractual Currency received by the Facility Agent upon the sale of the currency so received, after taking into account any premium and costs of exchange in connection with such sale. For the avoidance of doubt the Facility Agent and the Lenders shall not be obliged to accept any such payment in a currency other than the Contractual Currency nor shall the Facility Agent or the Lenders be liable to the Borrower for any loss or alleged loss arising from fluctuations in exchange rates between the date on which such payment is so received by the Facility Agent and the date on which the Facility Agent effects such sale, as to which the Facility Agent shall (as against the Borrower) have an absolute discretion. If any sum due from the Borrower under this Agreement or any of the Facility Documents or any order or judgment given or made in relation hereto is required to be converted from the Contractual Currency or the currency in which the same is payable under such order or judgment (the “first currency”) into another currency (the “second currency”) for the purpose of (a) making or filing a claim or proof against the Borrower, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to this Agreement or any of the Facility Documents, the Borrower shall indemnify and hold harmless each of the Beneficiaries from and against any loss suffered as a result of any difference between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which that Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Borrower under the indemnity contained in this clause 12.2 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Agreement or any of the Facility Documents and the term “rate of exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

 

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12.3   General operating indemnity

 

12.3.1   The Borrower hereby agrees at all times to pay promptly or, as the case may be, indemnify and hold the Beneficiaries, the Banks and the Related Companies of any Beneficiary or, as the case may be, Bank and each of them and their respective officers, directors, secondees, agents and employees (together the “Indemnified Persons”) harmless on a full indemnity basis from and against each and every Loss suffered or incurred by or imposed on any Indemnified Person:

 

  (a) arising directly or indirectly out of or in any way connected with the purchase, refurbishment, conversion, manufacture, construction, installation, transportation, ownership, possession, performance, management, sale, import to or export from any jurisdiction, control, use or operation, registration, navigation, certification, classification, management, xxxxxxx, provisioning, the provision of bunkers and lubricating oils, testing, design, condition, acceptance, chartering, sub-leasing, insurance, maintenance, repair, service, modification, refurbishment, dry-docking, survey, overhaul, replacement, removal, repossession, return, redelivery, sale or disposal of the Rig (or any part thereof), whether or not such Loss may be attributable to any defect in the Rig (or any part thereof) or to the design, construction or use thereof or from any maintenance, service, repair, overhaul or inspection and regardless of when the same shall arise (whether prior to, during or after termination of this Agreement) and whether or not the Rig (or any part thereof) is in the possession or control of the Borrower, the Head Charterer, the Sponsor or the Charterer or any other person;

 

  (b) as a consequence of any claim that any design, article or material in the Rig (or any part thereof) or relating thereto or the operation or use thereof constitutes an infringement of patent, copyright, design or other proprietary right;

 

  (c) in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, requisition, impounding, forfeiture or detention of the Rig (or any part thereof), or in securing or attempting to secure the release of the Rig (or any part thereof);

 

  (d) as a consequence (direct or indirect) of the breach by any person (other than the Indemnified Persons) of any of their respective obligations under this Agreement or any of the Facility Documents (other than the Charterer Acknowledgement and the Project Documents containing the Rig Rights) or of any of the warranties and representations on the part of any person (other than the Indemnified Persons) made in this Agreement or in any of the Facility Documents being untrue or inaccurate in any respect whatsoever when made,

save where such Losses arise as a direct consequence of the wilful misconduct of a Beneficiary, a Beneficiary acting with reckless disregard for the consequences or a breach by a Beneficiary of its express obligations under this Agreement or any of the Facility Documents; and

 

12.3.2   any costs and expenses incurred by the Indemnified Persons in connection with the sale of the Rig (or any part thereof) (including, without limitation, broker’s commissions, redelivery costs (if any), marketing expenses, legal costs, storage, insurance, registration fees and any other expenses of the Indemnified Persons incurred pending the sale or disposal of the Rig (or any part thereof) or otherwise in connection with the sale or disposal of the Rig (or any part thereof)).

 

12.4   Environmental indemnity

Without prejudice to the provisions of clause 12.3, the Borrower shall indemnify the Indemnified Persons and each of them on demand and hold the Indemnified Persons and each of them harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal), penalties, fines, damages, judgments, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against the Indemnified Persons or any of them at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim in respect of the Borrower or the Rig made or asserted against the Indemnified Persons or any of them if such Environmental Claim would not have been, or been capable of being, made or asserted against the Indemnified Persons if they had not entered into this Agreement or any of the Facility Documents and/or exercised any of their rights, powers and discretions thereby conferred and/or performed any of their obligations thereunder and/or been involved in any of the transactions contemplated by this Agreement and the Facility Documents.

 

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12.5   Grossing-up of indemnity payments

If any of the Beneficiaries or any other Indemnified Person makes a payment or suffers a Loss in respect of which it is entitled to be reimbursed or indemnified or otherwise held harmless pursuant to this clause 12 or any other provision of this Agreement or any of the other Facility Documents and such payment or Loss is not or will not be wholly deductible for the purposes of the tax computations of that Beneficiary or other Indemnified Person, whilst the payment to be made by way of indemnity or reimbursement will or is likely to give rise to a Tax liability for that Beneficiary or other Indemnified Person and/or where such payment is likely to give rise to a Tax liability in any period of account of the Beneficiary or other Indemnified Person which is earlier than the period of account in which the loss or payment is deductible then at the same time as the Borrower makes the payment by way of reimbursement or indemnity, it shall pay such an additional amount as shall be certified by an officer of the applicable Beneficiary or other Indemnified Person as will ensure that the applicable Beneficiary or other Indemnified Person shall be in the same after-Tax position as it would have been had the applicable reimbursement or indemnity payment not given rise to any liability for Tax or such payment had been deductible. The Borrower shall indemnify each Beneficiary against any costs or Losses incurred by any of them by reason of any failure of the Borrower to make any additional payment in respect of the applicable reimbursement or indemnity payment.

 

13   Unlawfulness and increased costs; mitigation

 

13.1   Unlawfulness

If it is or becomes contrary to any law or regulation for any Lender to contribute to the Advances or to maintain its Commitment or fund its Contribution, such Lender shall promptly, through the Facility Agent, notify the Borrower whereupon (a) such Lender’s Commitment shall be reduced to zero and (b) subject to clause 13.2, the Borrower shall be obliged to prepay the Contribution of such Lender upon receipt of that notice or on the latest date permitted by the law or regulation pursuant to which the relevant unlawfulness arises. Any prepayment pursuant to this clause 13.1 shall be made together with all amounts referred to in clause 6.6 (Amounts payable on prepayment). Any Lender giving a notice pursuant to this clause 13.1 shall, as soon as reasonably practicable after the date that notice is given, provide to the Borrower, through the Facility Agent, a copy of advice obtained by that Lender from qualified external legal counsel confirming the relevant unlawfulness and the Borrower shall, within five (5) Banking Days of demand, pay to that Lender the cost incurred by that Lender in connection with obtaining that advice.

 

13.2   Increased Costs

If the result of:

 

  (a) any change in, or in the interpretation or application of, or any replacement of, the Basel 2 Accord or the introduction of any law, regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the relevant Lender or, as the case may be, its Affiliate is required to comply) in relation to the Basel 2 Accord (each a “Basel 2 Change of Law”); or

 

  (b) any change in, or in the interpretation or application of, or the introduction of, any other law, regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the relevant Lender or, as the case may be, its Affiliate is required to comply), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits (each a “General Change of Law”); or

 

  (c) any change in, or in the interpretation or application of, or the replacement of, the relevant Lender’s Basel 2 Approach (each a “Change of Basel 2 Approach”),

 

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is to:

 

13.2.1   subject the relevant Lender (for the purposes of this clause 13 each such Lender shall be an “Affected Lender”) to Taxes or change the basis of Taxation of such Affected Lender with respect to any payment under this Agreement or any Facility Document (other than, for the purposes of this clause 13 and clause 13.2, Taxes or Taxation on the overall net income, profits or gains of any Affected Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

 

13.2.2   increase the cost to, or impose an additional cost on, any Affected Lender or any of its Affiliates in making or keeping available all or part of the Commitments of such Affected Lender or maintaining or funding all or part of the Contributions of such Affected Lender; and/or

 

13.2.3   reduce the amount payable or the effective return of any Affected Lender under this Agreement; and/or

 

13.2.4   reduce the rate of return of any Affected Lender or any of its Affiliates on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Affected Lender’s obligations under this Agreement; and/or

 

13.2.5   require any Affected Lender or any of its Affiliates to make a payment or forego a return calculated by reference to or on any amount received or receivable by such Affected Lender under this Agreement or any Facility Document; and/or

 

13.2.6   cause any Affected Lender or any of its Affiliates to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitments or Contributions of such Affected Lender from its capital for regulatory purposes,

then and in each such case (but subject to clauses 6.3 and 13.3):

 

  (a) such Affected Lender shall notify the Borrower through the Facility Agent in writing of such event promptly upon its becoming aware of the same; and

 

  (b) the Borrower shall on demand, made at any time whether or not the Contributions of such Affected Lender have been repaid, pay to the Facility Agent for the account of such Affected Lender the amount which such Affected Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Affected Lender or its Affiliate regards as confidential) is required to compensate on an after-tax basis such Affected Lender and/or its Affiliate for such liability to Taxes, increased or additional cost, reduction, payment, forgone return or loss.

 

13.3   Exceptions

Nothing in clause 13.1 shall entitle any Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, forgone return or loss to the extent that the same:

 

13.3.1   is the subject of an additional payment under clause 8.5 (Grossing up for Taxes); or

 

13.3.2   in the case of a General Change of Law, is attributable to the Basel 2 Accord in the form existing on the date of this Agreement; or

 

13.3.3   in the case of a Change of Basel 2 Approach, is not attributable to a Basel 2 Change of Law; or

 

13.3.4   directly results from (i) a breach by the applicable Lender of its express obligations under this Agreement or any Facility Document, other than any breach which arises as a consequence of any act or omission of any Security Party, or (ii) from a wilful breach by the applicable Lender of any applicable law or regulation; or

 

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13.3.5   is compensated for by the payment of Mandatory Cost.

 

13.4   Mitigation

If circumstances arise which would, or would upon the giving of notice, result in:

 

13.4.1   the Borrower being required to make an increased payment to any Lender pursuant to clause 8.5 (Grossing up for Taxes);

 

13.4.2   the reduction of any Lender’s Commitment to zero or the Borrower being required to prepay any Lender’s Contribution pursuant to clause 13.1 (Unlawfulness);

 

13.4.3   the Borrower being required to make a payment to any Lender to compensate such Lender or any of its Affiliates for a liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss pursuant to paragraph (b) of clause 13.1; or

 

13.4.4   an increased Additional Cost Rate,

then, without in any way limiting, reducing or otherwise qualifying the obligations of the Borrower under clause 8 (Payments and Taxes) and this clause 13, such Lender shall, in consultation with the Facility Agent and the Borrower, endeavour to take such reasonable steps as are open to it (or, in the case of clauses 13.2.2, and 13.2.4 to 13.2.6, its Affiliate) to mitigate or remove such circumstances (including the transfer of the rights and obligations of such Lender under this Agreement and the Facility Documents to another lending office or to another bank or financial institution acceptable to the Borrower (acting reasonably)) unless the taking of such steps might (in the opinion of such Lender or, as the case may be, its Affiliate) be prejudicial to such Lender or, as the case may be, its Affiliate or be in conflict with the general banking policies of the Lender or, as the case may be, its Affiliate or involve such Lender or, as the case may be, its Affiliate in expense (unless such expense is fully indemnified to the satisfaction of such Lender or its Affiliate) or an increased administrative burden.

 

13.5   Decreased costs

If the result of any of the matters referred to in paragraphs (a) and (b) of clause 13.1 (but excluding the matters referred to in clause 13.2.2), is to:

 

13.5.1   reduce the burden of Taxation on a Lender (for the purposes of this clause 13.5 each such Lender shall be an “Affected Lender”) with respect to any payment under this Agreement or any Facility Document (other than, for the purposes of this clause 13.5, Taxes or Taxation on the overall net income, profits or gains of any Affected Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

 

13.5.2   reduce or remove the cost to any Affected Lender or any of its Affiliates in making or keeping available all or part of the Commitments of such Affected Lender or maintaining or funding all or part of the Contributions of such Affected Lender; and/or

 

13.5.3   increase the amount payable to or the effective return of any Affected Lender under this Agreement; and/or

 

13.5.4   increase the rate of return of any Affected Lender or any of its Affiliates on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Affected Lender’s obligations under this Agreement; and/or

 

13.5.5   enable any Affected Lender or any of its Affiliates to reduce a payment or obtain a higher return calculated by reference to or on any amount received or receivable by such Affected Lender under this Agreement or any Facility Document; and/or

 

13.5.6   cause any Affected Lender or any of its Affiliates to earn a profit (including future profits) by reason of not being obliged to deduct all or part of the Commitments or Contributions of such Affected Lender from its capital for regulatory purposes,

 

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then and in each such case:

 

  (a) such Affected Lender shall notify the Borrower through the Facility Agent in writing of such event promptly upon its becoming aware of the same;

 

  (b) such Affected Lender shall pay to the Facility Agent for the account of the Borrower the amount which such Affected Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Affected Lender or its holding company regard as confidential) is required to pass on to the Borrower, on an after-tax basis, the amount of such reduced burden of Taxes, reduced cost, increase, reduced payment, higher return or profit; and

 

  (c) the Facility Agent shall pay any amount received by the Facility Agent pursuant to clause 13.5.6(b) for the account of the Borrower to the Earnings Account for application pursuant to clause 5 of the Deed of Proceeds and Priorities.

 

13.6   Exceptions

Nothing in clause 13.5 shall entitle the Borrower to receive any amount in respect of a benefit for any such reduced liability to Taxes, reduced or removed cost, increase, reduced payment, higher return or profit to the extent that the same:

 

13.6.1   is the subject of a payment to the Borrower under clause 8.5.3 (Grossing up for Taxes); or

 

13.6.2   in the case of a General Change of Law, is attributable to the Basel 2 Accord in the form existing on the date of this Agreement; or

 

13.6.3   in the case of a Change of Basel 2 Approach, is not attributable to a Basel 2 Change of Law; or

 

13.6.4   directly results from (i) a breach by the Borrower or any other Security Party of its express obligations under this Agreement or any Facility Document, other than any breach which arises as a consequence of any act or omission of any Lender, or (ii) from a wilful breach of any applicable law or regulation by the Borrower or any other Security Party.

 

14   Set-off and pro rata payments

 

14.1   Set-off

If, as between the Beneficiaries or any of them on the one hand and the Borrower on the other, there are any moneys due and payable to the Borrower from the Beneficiaries or any of them under this Agreement or any of the Facility Documents, the Borrower authorises each Beneficiary, at any time an Event of Default has occurred and is continuing, to apply any such amounts in or towards satisfaction of any sum then due and payable from the Borrower to such Beneficiary under this Agreement. For this purpose each Beneficiary is authorised to purchase with the moneys standing to the credit of any account of the Borrower other than the Accounts with that Beneficiary at any of its branches such other currencies as may be necessary to effect such application. No Beneficiary shall be obliged to exercise any right given to it by this clause 14.1. Each Beneficiary shall notify the Facility Agent and the Borrower (giving full details) forthwith upon the exercise or purported exercise of any right of relevant set-off and the Facility Agent shall inform the other Beneficiaries.

 

14.2   Pro rata payments

 

14.2.1  

If at any time any Lender (the “Recovering Lender”) receives or recovers any amount owing to it by the Borrower under this Agreement by direct payment, set-off or in any manner other than by payment through the Facility Agent pursuant to clause 8.1 (No set-off or counterclaim) or clause 8.7 (Application of payments prior to the Termination Date) or clause 8.8 (Application of Payments after the Termination Date) (not being a payment received from a Transferee of such Lender’s Contribution or any other payment of an amount due to the Recovering Lender for its sole account pursuant to clauses 5.6 (Market disruption), 6.3 (Additional voluntary prepayment),

 

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  6.4 (Mandatory Prepayment), 6.5 (Prepayment on Total Loss), 8.5 (Grossing-up for Taxes), 12.1 (Miscellaneous indemnities), 12.2 (Currency indemnity), 13.1 (Unlawfulness) or 13.2 (Increased costs)), the Recovering Lender shall, within two (2) Banking Days of such receipt or recovery (a “Relevant Receipt”) notify the Facility Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Lender would have received if the Relevant Receipt had been received by the Facility Agent and distributed pursuant to clause 8.1 (No set-off or counterclaim) or clause 8.7 (Application of Payments prior to a Termination Date) (as the case may be) then:

 

  (a) within two Banking Days of demand by the Facility Agent, the Recovering Lender shall pay to the Facility Agent an amount equal (or equivalent) to the excess;

 

  (b) the Facility Agent shall treat the excess amount so paid by the Recovering Lender as if it were a payment made by the Borrower and shall distribute the same to the Lenders (other than the Recovering Lender) in accordance with clause 8.7 (Application of payments prior to a Termination Date); and

 

  (c) as between the Borrower and the Recovering Lender the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower to the other Lenders shall, to the extent of the amount so re-distributed to them, be treated as discharged.

 

14.2.2   If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Lender (whether to a liquidator or otherwise) each Lender to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Lender repay to the Recovering Lender such Lender’s pro rata share of the amount which has to be refunded by the Recovering Lender.

 

14.2.3   Each Lender shall on request supply to the Facility Agent such information as the Facility Agent may from time to time request for the purpose of this clause 14.2.

 

14.2.4   Notwithstanding the foregoing provisions of this clause 14.2 no Recovering Lender shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Lender are instituted by it without prior notice having been given to such party through the Facility Agent).

 

14.3   No release

For the avoidance of doubt it is hereby declared that failure by any Recovering Lender to comply with the provisions of clause 14.2 shall not release any other Recovering Lender from any of its obligations or liabilities under clause 14.2.

 

14.4   No charge

The provisions of this clause 13.4.4 shall not, and shall not be construed so as to, constitute a charge by a Lender over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 14.2.

 

15   Assignment, substitution and lending offices

 

15.1   Benefit and burden

This Agreement shall be binding upon, and enure for the benefit of, the Beneficiaries which are party to this Agreement, and their respective successors in title and Transferees and the Borrower and its successors in title and any assignee or transferee of the Borrower permitted in accordance with clause 15.2.

 

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15.2   No assignment by Borrower

The Borrower may not assign any of its rights or otherwise transfer any of its rights or obligations under this Agreement or the Facility Documents without the prior written consent of the Facility Agent, acting on the instructions of all the Lenders.

 

15.3   Transfer

The parties hereto agree that each Lender (an “Existing Lender”) may transfer all or any part (which, in the case of a transfer of part only, shall be in an amount of its Commitment and Contribution which is in aggregate not less than seven million five hundred thousand Dollars ($7,500,000)) of its rights, benefits and obligations under this Agreement and the other Facility Documents to another person (a “Transferee”) provided that, in the case of any transfer made when no Event of Default has occurred and is continuing, the Borrower has given its consent thereto, such consent not to be unreasonably withheld or delayed and, in any case, shall be deemed to have been given if the Facility Agent has not received notice from the Borrower that consent will not be given on or prior to the date falling seven (7) Banking Days after the date the Borrower received notice of the relevant proposed transfer. Any such transfer shall be effected upon not less than five (5) Banking Days’ prior notice by delivery to the Facility Agent of a duly completed Transfer Certificate duly executed by the Existing Lender and the Transferee, together with the payment by the Existing Lender to the Facility Agent of a fee of two thousand Dollars ($2,000) in respect of the administrative costs incurred by the Facility Agent in connection with such transfer. On the Effective Date (as specified and defined in a Transfer Certificate so executed and delivered), to the extent that the Commitment and Contribution of the Existing Lender are expressed in a Transfer Certificate to be the subject of the transfer in favour of the Transferee effected pursuant to this clause 15.3, by virtue of the counter-signature of the Transfer Certificate by the Facility Agent (for itself and the other parties to this Agreement):

 

15.3.1   the existing parties to this Agreement and the Existing Lender shall be released from their respective obligations towards one another under this Agreement (“discharged obligations”) and their respective rights against one another under this Agreement (“discharged rights”) shall be cancelled;

 

15.3.2   the Transferee party to the relevant Transfer Certificate and the existing parties to this Agreement (other than such Existing Lender) shall assume obligations towards each other which differ from the discharged obligations only insofar as they are owed to or assumed by such Transferee instead of to or by such Existing Lender; and

 

15.3.3   the Transferee party to the relevant Transfer Certificate and the existing parties to this Agreement (other than such Existing Lender) shall acquire rights against each other which differ from the discharged rights only insofar as they are exercisable by or against such Transferee instead of by or against such Existing Lender.

The Facility Agent shall promptly notify the other Lenders and the Borrower of the receipt by it of any Transfer Certificate and shall promptly deliver a copy of such Transfer Certificate to the Borrower.

 

15.4   Reliance on Transfer Certificate

The Facility Agent and the Borrower shall be fully entitled to rely on any Transfer Certificate delivered to the Facility Agent in accordance with the foregoing provisions of this clause 15 which is complete and regular on its face as regards its contents and purportedly signed on behalf of the relevant Existing Lender and the Transferee and neither the Facility Agent nor the Borrower shall have any liability or responsibility to any party as a consequence of placing reliance on and acting in accordance with any such Transfer Certificate if it proves to be the case that the same was not authentic or duly authorised.

 

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15.5   Authorisation of Facility Agent

Each party to this Agreement irrevocably authorises the Facility Agent to counter-sign each Transfer Certificate on its behalf for the purposes of clause 15.3 without any further consent (save as may be provided for in clause 15.3) of, or consultation with, the Borrower or such party. The Facility Agent shall notify the Borrower as soon as reasonably practicable after signing any Transfer Certificate on the Borrower’s behalf.

 

15.6   Documenting Transfers

If any Lender novates all or any part of its rights, benefits, obligations and liabilities as provided in clause 15.3, the Borrower undertakes, immediately upon being requested to do so by the Facility Agent and at the cost of the Existing Lender, to enter into, and use all reasonable endeavours to procure that the other Security Parties shall enter into, such documents, deeds, agreements and instruments as the Facility Agent shall deem appropriate in connection with the transfer to the Transferee of all or the relevant part of that Existing Lender’s rights, benefits, obligations and liabilities under and pursuant to this Agreement and the Facility Documents.

 

15.7   Construction of certain references

If any Lender novates all or any part of its rights, benefits and obligations as provided in clause 15.3 all relevant references in this Agreement to such Lender shall thereafter be construed as a reference to such Lender and/or its Transferee to the extent of their respective interests.

 

15.8   Facility Offices

Each Lender shall lend through its office at the address specified in Schedule 1 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Lender selected from time to time by such Lender as the office through which such Lender wishes to lend for the purposes of this Agreement and, following any change of its Facility Office by a Lender, the Facility Office of that Lender shall mean the replacement office selected by that Lender in accordance with this clause 15.8 or pursuant to clause 13.3 (Mitigation) or pursuant to a request from the Borrower. If the Facility Office through which a Lender is lending is changed pursuant to this clause 15.8, such Lender shall notify the Facility Agent promptly of such change.

If:

 

  (a) any Lender assigns or transfers any of its rights, benefits or obligations hereunder otherwise than:

 

  (i) in order to reduce or mitigate any requirement to make any increased payment where such assignment or transfer is made with the agreement of the Borrower (provided however that if the Borrower withholds its consent to any such proposed assignment or transfer, the Borrower shall be obliged to make the applicable deduction or withholding and other increased payment or to prepay the Facility in accordance with clauses 6.2 and 6.3);

 

  (ii) upon the request of the Borrower; or

 

  (b) any Lender changes its Facility Office, in any such case otherwise than:

 

  (i) at the request of the Borrower; or

 

  (ii)

in order to reduce or mitigate any requirement to make any increased payment where such change of Facility Office is made with the agreement of the Borrower (provided however that if the Borrower withholds its consent to any such proposed change of Facility Office, the Borrower shall be obliged to make the applicable deduction or withholding and other increased payment or to prepay the Facility in accordance with clauses 6.2 and 6.3),

 

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the Borrower shall not be obliged to make any indemnity payment or increased payment pursuant to clause 8.5 of this Agreement or clause 13.2 to the relevant assignee or Transferee (or, in the case of a change by the Lender of its Facility Office, to such Lender) in excess of the indemnity payment or increased payment which the Borrower would have been obliged to make in the absence of such assignment, transfer or change if such liability to make the applicable indemnity payment or increased payment arises as a result of either (a) the law in force in any applicable jurisdiction at the time of the assignment, transfer or change, or (b) legislation in any applicable jurisdiction of which it is aware which is before the legislature at the time of such assignment, transfer or change and is subsequently enacted by that legislature.

 

15.9   Disclosure of information

 

15.9.1   Any Lender may disclose any information about the Borrower, any member of the Group and the Facility Documents as that Lender shall consider appropriate to any of its Affiliates and any other person:

 

  (a) to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement;

 

  (b) with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or the Borrower; and

 

  (c) to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

subject to such Lender obtaining an undertaking on terms acceptable to the Borrower to treat such information as confidential and provided that, in respect of any such information relating to the Group which was disclosed to the Lenders prior to the date of this Agreement but which was not included in the Information Memorandum, the relevant Lender first obtains the written consent of the Borrower.

 

15.9.2   Any Beneficiary may disclose to a rating agency or its professional advisers, or (with the prior written consent of the Borrower) any other person any information about the Borrower, the Group and the Facility Documents as that Lender or other Beneficiary shall consider appropriate.

 

15.10   Calculation of Mandatory Cost

Each Lender shall supply the Facility Agent (with a copy to the Borrower) with any information required by the Facility Agent in order to calculate the Mandatory Cost in accordance with Schedule 8.

 

16   Facility Agent, Security Trustee and Reference Banks

 

16.1   Appointment of Facility Agent and Security Trustee

Each of the Lenders, the Arranger and (in the case of the appointment in paragraph (i)) the Security Trustee or (in the case of the appointment in paragraph (ii)) the Facility Agent irrevocably appoints (i) the Facility Agent as its agent for the purposes of the Facility Documents and (ii) the Security Trustee as security trustee for the purposes of this Agreement and the Security Documents and irrevocably authorises respectively:

 

16.1.1   the Security Trustee to execute each of the Security Documents and all such further documents as may be approved by the Majority Lenders for execution by the Security Trustee; and

 

16.1.2  

each of the Facility Agent and the Security Trustee (whether or not by or through employees or agents) to take such action on such Lender’s behalf and to exercise such rights, remedies, powers, authorities and discretions as are specifically delegated to the Facility Agent or (as the case may be) the Security Trustee by this Agreement or (as the case may be) the Facility

 

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  Documents, together with such powers and discretions as are reasonably incidental thereto (but subject to any restrictions or limitations specified in this Agreement). Neither the Facility Agent nor the Security Trustee shall, however, have any duties, obligations or liabilities (whether fiduciary or otherwise) to the Lenders beyond those expressly stated in this Agreement and/or the Facility Documents.

Notwithstanding that the Facility Agent and the Security Trustee may from time to time be the same entity, the Facility Agent and Security Trustee have entered into this Agreement in their separate capacities as (i) in the case of the Facility Agent, agent for the Lenders under and pursuant to the Facility Documents and (ii) in the case of the Security Trustee, as security trustee for the Facility Agent and the Beneficiaries to hold the security created or to be created by the Security Documents on the terms set out in the Security Documents and/or in this Agreement. However, where this Agreement provides for the Facility Agent to communicate with or provide instructions to the Security Trustee, while the Facility Agent and the Security Trustee are the same entity, it will not be necessary for there to be any such formal communications or instructions notwithstanding that this Agreement provides in certain cases for the same to be in writing.

 

16.2   Declaration of Trust

The Security Trustee hereby accepts its appointment under clause 16.1 as trustee of the Secured Property with effect from the date of this Agreement and acknowledges and declares that it holds and shall hold the same on trust for the Beneficiaries and to pay the same to the Facility Agent for application in accordance with clause 8.7 (Application of Payments prior to a Termination Date), clause 8.8 (Application of Payments after a Termination Date) or as the case may be, the provisions of the Deed of Proceeds and Priorities.

 

16.3   Duration of Trust

The trust constituted or evidenced by this Agreement shall remain in full force and effect until the earlier of:

 

16.3.1   the expiration of a period of eighty (80) years from the date of this Agreement; or

 

16.3.2   receipt by the Security Trustee of confirmation in writing from the Facility Agent that all the Secured Obligations have been paid, repaid, performed, discharged and satisfied in full,

and the parties to this Agreement declare that the perpetuity period applicable to this Agreement shall, for the purpose of the Perpetuities and Accumulations Xxx 0000, be a period of eighty (80) years from the date of this Agreement.

 

16.4   Agent’s actions

Any action taken by either Agent under or in relation to this Agreement or, as the case may be, the Facility Documents with requisite authority, or on the basis of appropriate instructions, received from the Majority Lenders (or as otherwise duly authorised) shall be binding on all the Lenders.

 

16.5   Agent’s duties

Each Agent shall:

 

16.5.1   promptly notify each Beneficiary of the contents of each notice, certificate or other document received by that Agent from each Security Party and/or the Charterer under or pursuant to any provision of this Agreement or any Facility Document;

 

16.5.2  

consult with the Lenders as to whether and, if so, how a discretion vested in that Agent is, either in any particular instance or generally, to be exercised but so that this shall not prevent the applicable Agent acting without seeking or obtaining instructions from all or any of the Lenders (a) in relation to routine administrative matters and (b) in relation to matters where the interests

 

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  of the Lenders or the value of the security constituted by the Security Documents or other exceptional circumstances where, in the opinion of the applicable Agent, time does not permit such consultation and urgent action is required, and from exercising its rights and powers to preserve the security constituted by the Security Documents, so long as in each case the applicable Agent informs the Lenders as soon as reasonably practicable thereafter of the circumstances and of the action taken; and

 

16.5.3   (subject to clause 16.13 and the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action with respect to the exercise of all or any of its rights, remedies, powers and discretions as agent or security trustee and the grant of any consents and releases, as the Majority Lenders may reasonably direct.

 

16.6   Agent’s rights

Each Agent may:

 

16.6.1   in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement, act or, as the case may be, refrain from acting in accordance with the instructions of the Majority Lenders, and shall be fully protected in so doing;

 

16.6.2   unless and until it shall have received directions from the Majority Lenders, take such action, or refrain from taking such action in respect of a Default of which that Agent has actual knowledge as it shall deem advisable in the best interests of the Lenders (but shall not be obliged to do so);

 

16.6.3   refrain from acting in accordance with any instructions of the Majority Lenders to institute any legal proceedings arising out of or in connection with this Agreement and/or the Security Documents until it has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result;

 

16.6.4   deem and treat (i) each Lender as the person entitled to the benefit of the Contribution of such Lender for all purposes of this Agreement and the Facility Documents unless and until a Transfer Certificate shall have been filed with the Facility Agent and shall have become effective and (ii) the office set opposite the name of each Lender in Schedule 1 or, as the case may be, in any relevant Transfer Certificate as such Lender’s lending office unless and until a written notice of change of lending office shall have been received by the Facility Agent; and each Agent may act upon any such notice unless and until the same is superseded by a further such notice;

 

16.6.5   rely as to matters of fact which might reasonably be expected to be within the knowledge of a Security Party upon a certificate signed by any director of that Security Party; and

 

16.6.6   refrain from doing anything which would, or might in its opinion, be contrary to any law or regulation of any jurisdiction and may do anything which is in its opinion necessary or desirable to comply with any such law or regulation.

 

16.7   No liability of Agents

Neither Agent nor any of their respective employees and agents shall:

 

16.7.1   be obliged to request any certificate or opinion under any provision of this Agreement and the Facility Documents or to make any enquiry as to the use of the proceeds of a Facility unless so required in writing by the Majority Lenders, in which case the applicable Agent shall promptly make the appropriate request of the Borrower; or

 

16.7.2   be obliged to make any enquiry as to any breach or default by the Borrower or any other Security Party or the Charterer in the performance or observance of any of the provisions of this Agreement and the other Facility Documents or as to the existence of a Default unless the applicable Agent has actual knowledge thereof or has been notified in writing thereof by a Lender, in which case that Agent shall promptly notify the Lenders of the relevant event, Default or other event or circumstance; or

 

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16.7.3   be obliged to enquire whether or not any representation or warranty made by the Borrower or any other Security Party pursuant to this Agreement or any of the Facility Documents is true; or

 

16.7.4   be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a breach of any duty of confidentiality or otherwise be actionable or render it liable to any person; or

 

16.7.5   be obliged to account to any Lender for any sum or the profit element of any sum received by it for its own account; or

 

16.7.6   be obliged to institute any legal proceedings arising out of or in connection with, or otherwise take steps to enforce, this Agreement and/or the Facility Documents other than on the instructions of the Majority Lenders; or

 

16.7.7   be liable to any Lender for any action taken or omitted under or in connection with this Agreement and/or the Facility Documents or the Facility unless caused by its negligence or wilful misconduct.

For the purposes of this clause 16 neither Agent shall be treated as having actual knowledge of any matter of which any division of that Agent (other than the agency or loan administration department of the person for the time being acting as that Agent) may become aware in the context of any activities from time to time undertaken by that Agent for any Security Party or the Charterer or any other person which may be a trade competitor of any Security Party or the Charterer or may otherwise have commercial interests similar to those of any Security Party or the Charterer.

 

16.8   Non-reliance on Agents

Each Lender acknowledges, by virtue of its execution of this Agreement or, as the case may be, a Transfer Certificate, that it has not relied, and will not rely, on any statement, opinion, forecast or other representation made by either Agent to induce it to enter into this Agreement and that it has made and will continue to make, without reliance on either Agent and based on such documents as it considers appropriate, its own appraisal of the creditworthiness of the Borrower and the other Security Parties and the Charterer and its own independent investigation of the financial condition, prospects and affairs of the Borrower and the other Security Parties and the Charterer in connection with the making and continuation of the Facility available under this Agreement and its own independent investigation of the application of any relevant Basel 2 Regulation to the transactions contemplated by the Transaction Documents. Neither Agent shall have any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect to the Borrower or other Security Parties or the Charterer whether coming into its possession before the making of any Advance or at any time or times thereafter, other than as provided in clause 16.5.1 or which it is otherwise obliged to provide to the Lenders in accordance with this Agreement.

 

16.9   No Responsibility on Agents for performance of Security Parties

Neither the Agents nor the Arranger shall have any responsibility or liability to any Beneficiary:

 

16.9.1   on account of the failure of the Borrower and the other Security Parties to perform their respective obligations under this Agreement and the other Facility Documents to which they are respectively party; or

 

16.9.2   for the creditworthiness, financial or other condition or affairs of the Borrower and the other Security Parties; or

 

16.9.3   for the completeness or accuracy of any certificates, statements, representations or warranties in this Agreement or any of the Facility Documents or the Information Memorandum or any document delivered under this Agreement or any of the Facility Documents; or

 

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16.9.4   for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Agreement or any of the Facility Documents or of any certificate, report or other document executed or delivered under this Agreement or any of the Facility Documents; or

 

16.9.5   to ascertain whether all deeds, documents, instruments and agreements which should have been deposited with or delivered to it under or pursuant to the Facility Documents or any of them have been so deposited with or delivered to it; or

 

16.9.6   to investigate or make any enquiry into the title of the Borrower or any other Security Party to any of their respective property or assets; or

 

16.9.7   for the failure to register or file any Facility Document with the Registrar of Companies or any other public office elsewhere; or

 

16.9.8   for the failure to register any of the Facility Documents in accordance with the provisions of the documents of title of the Borrower or any other Security Party to any of their respective property or assets; or

 

16.9.9   for the failure to take or require the Borrower or any other Security Party to take any steps to render any of the Facility Documents effective as regards property or assets outside England or Wales or to secure the creation of any ancillary charge under the laws of the jurisdiction concerned; or

 

16.9.10   for the application of any Basel 2 Regulation to the transactions contemplated by the Transaction Documents; or

 

16.9.11   otherwise in connection with the Facility or its negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Majority Lenders or, where required, all of the Lenders,

other than (if applicable) as a consequence of the wilful misconduct or negligence of the Agents.

 

16.10   Reliance on documents and professional advice

Each Agent shall be entitled to rely on any communication, instrument or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person and shall be entitled to rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers reasonably selected or approved by it (including those in the applicable Agent’s employment).

 

16.11   Other dealings

Each Agent may, without any liability to account to the Lenders, accept deposits from, lend money to, and generally engage in any kind of banking or other business with, and provide advisory or other services to, any Security Party or any member of the Group or the Charterer or any Subsidiary of any of the foregoing, any of the Lenders or any Beneficiary or any Subsidiary thereof as if it were not an Agent.

 

16.12   Rights of Agent as Lender; no partnership

With respect to its own Commitment and Contribution (if any) each Agent shall have the same rights and powers under this Agreement and the Facility Documents as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it under this Agreement and/or the Facility Documents and the term “Lenders” shall, unless the context clearly otherwise indicates, include each of the Facility Agent and the Security Trustee in their respective individual capacity in each case as a Lender. This Agreement shall not and shall not be construed so as to constitute a partnership between the parties or any of them.

 

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16.13   Amendments; waivers

 

16.13.1   Subject to clause 16.13.2, the Facility Agent or, as the case may be, the Security Trustee may, with the consent of the Majority Lenders (or if and to the extent expressly authorised by the other provisions of this Agreement or the Facility Documents), and, if so instructed by the Majority Lenders, shall (i) agree amendments or modifications to this Agreement or the Facility Documents (other than the Charterer Acknowledgement) with the Security Parties and/or (ii) vary or waive breaches of, or defaults under, or otherwise excuse performance of, any provision of this Agreement or the Facility Documents (other than the Charterer Acknowledgement) by the Security Parties. Any such action so authorised and effected by the either Agent shall be documented in such manner as the applicable Agent shall (with the approval of the Majority Lenders) determine, shall be promptly notified to the Lenders by the applicable Agent and (without prejudice to the generality of clause 16.14 (Reimbursement and indemnity by the Lenders)) shall be binding on all the Lenders.

 

16.13.2   Except with the prior written consent of all the Lenders, neither Agent shall have authority on behalf of the Lenders to agree with (A) the Charterer any amendment to or modification to the Charterer Acknowledgement or to grant waivers in respect of breaches or defaults or to vary or excuse performance of or under the Charterer Acknowledgement by the Charterer or (B) the Borrower or any other Security Party any amendment or modification to this Agreement or the Facility Documents or to grant waivers in respect of breaches or defaults or to vary or excuse performance of or under this Agreement or any of the Facility Documents by the Borrower or any other Security Party, if the effect of such amendment, modification, waiver, variation or excuse would be to:

 

  (a) reduce the Margin or any other amount payable for the account of the Beneficiaries;

 

  (b) postpone or extend the due date or reduce the amount of any payment of principal, interest, commitment commission or other amount payable by the Borrower under this Agreement or any of the Facility Documents;

 

  (c) change the currency in which any amount is payable by the Borrower or any other Security Party under this Agreement or any of the Facility Documents;

 

  (d) increase any Lender’s Commitment;

 

  (e) extend the Availability Period;

 

  (f) postpone or extend or otherwise change the Final Maturity Date;

 

  (g) change the definition of “Majority Lenders” in clause 1.2;

 

  (h) change any provision of this Agreement or any other Facility Document which expressly or impliedly requires the approval or consent of all the Lenders such that the relevant approval or consent may be given otherwise than with the sanction of all the Lenders;

 

  (i) change the order of distribution under clause 8.7 (Application of payments prior to a Termination Date), clause 8.8 (Application of payments after a Termination Date) or under clauses 5, 6, 7, 8 or 9 of the Deed of Proceeds and Priorities;

 

  (j) change clause 14.2 (pro-rata payments);

 

  (k) change this clause 16.13;

 

  (l) release the Borrower or any of the other Security Parties from the security created by any of the Facility Documents, unless all the Secured Obligations have been paid, repaid, performed, satisfied and discharged in full or such release is required in accordance with clause 16.22 of this Agreement;

 

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  (m) release any Security Party from any of its obligations under the Pre-Completion Guarantee unless such release is specifically provided for therein or all of the Secured Obligations have been paid, repaid, performed, satisfied and discharged in full or such release is required in accordance with clause 16.22 of this Agreement; or

 

  (n) release any Security Party from any of its obligations under the Deed of Undertaking unless such release is specifically provided for therein or all of the Secured Obligations have been paid, repaid, performed, satisfied and discharged in full or such release is required in accordance with clause 16.22 of this Agreement.

 

16.13.3   Except as provided in clause 10.3.1 with the prior written consent of all the Lenders or, as the case may be, the Majority Lenders, neither Agent shall have authority on behalf of the Lenders to consent to any proposed amendment, variation or modification to the Project Documents (other than Permitted Amendments) or to the granting of any waivers or the excusing of any performance under the Project Documents.

 

16.14   Reimbursement and indemnity by Lenders

Each Lender shall reimburse each Agent (rateably in accordance with (a) at any time prior to the first Drawdown Date, such Lender’s Commitment and (b) at any time thereafter, such Lender’s Share or Contribution), to the extent that that Agent is not reimbursed by the Security Parties, for the costs, charges and expenses incurred by that Agent in connection with the negotiation, preparation and execution of this Agreement and the Facility Documents and/or in contemplation of, or otherwise in connection with, the enforcement or attempted enforcement of, or the preservation or attempted preservation of any rights under, or in carrying out its duties under, this Agreement and/or any of the Facility Documents including (in each case) the fees and expenses of legal or other professional advisers. Each Lender shall on demand indemnify each Agent (rateably in accordance with its Share or Contribution) against all liabilities, damages, costs and claims whatsoever incurred by each Agent in connection with this Agreement and the Facility Documents or the performance of their respective duties under this Agreement and the Facility Documents or any action taken or omitted by either Agent under this Agreement and/or any of the Facility Documents, unless such liabilities, damages, costs or claims arise from the applicable Agent’s own negligence or wilful misconduct.

 

16.15   Retirement of Agents

 

16.15.1   The Facility Agent may and shall, upon the written request of the Majority Lenders, retire from its appointment as Facility Agent under this Agreement having given not less than thirty (30) days’ notice of its intention to do so to the Borrower and each of the Lenders, provided that no such retirement shall take effect unless a successor facility agent for the Lenders has been duly appointed by the Lenders. Any successor facility agent must be a Lender experienced in the oil and gas business and nominated by the Majority Lenders after good faith consultation with the Borrower or, failing such a nomination, any reputable Lender or financial institution experienced in the oil and gas business nominated by the retiring Facility Agent. Any costs and expenses reasonably incurred in connection with such retirement shall be for the account of the retiring Facility Agent, unless the retirement has been requested by the Majority Lenders, in which case such costs and expenses shall be for the account of the Majority Lenders requesting the retirement of the Facility Agent.

 

16.15.2   The Security Trustee may and shall, upon the written request of the Majority Lenders, (at no cost to the Borrower) retire from its appointment as Security Trustee under this Agreement and the Facility Documents having given not less than thirty (30) days’ notice of its intention to do so to the Borrower, the other Security Parties and each of the Lenders, provided however that no such retirement shall take effect unless:

 

  (a) a Lender experienced in the oil and gas business and nominated by the Majority Lenders or, in the absence of such a nomination, any reputable and experienced bank or financial institution nominated by the retiring Security Trustee has been appointed by the Lenders as the successor security trustee; and

 

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  (b) in compliance with its obligations under clause 16.15.5, the Security Trustee shall have done all acts, taken all steps and executed all deeds, documents and other instruments reasonably required by the successor security trustee in order to ensure the transfer of the property, assets and rights vested in the Security Trustee to the successor security trustee (or its nominee).

 

16.15.3   Any corporation into which the Facility Agent or the Security Trustee may be merged or converted or any corporation with which the Facility Agent or the Security Trustee may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Facility Agent or the Security Trustee shall be a party shall, to the extent permitted by applicable law, be the successor Facility Agent or (as the case may be) the Security Trustee under this Agreement and/or the Facility Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement, save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to the Borrower and the Lenders.

 

16.15.4   Upon any such successor Facility Agent or successor Security Trustee being appointed in accordance with clauses 16.15.1 or 16.15.2 above, the retiring Facility Agent or, as the case may be, the retiring Security Trustee shall be discharged from any further obligation under this Agreement (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Facility Agent or, as the case may be, the retiring Security Trustee. The retiring Facility Agent or, as the case may be, the retiring Security Trustee shall provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under this Agreement and the Facility Documents.

 

16.15.5   It is the intention that (except only as may be agreed in writing between any retiring Security Trustee and its successor with the prior approval of the Majority Lenders), upon the appointment of any successor to the Security Trustee, the property, assets and rights vested in the Security Trustee pursuant to this Agreement and the Facility Documents should, with immediate effect, be vested in such successor under the provisions of the Trustee Xxx 0000, either by operation of law or, failing that, by assignment or other form of transfer or conveyance. At any time and from time to time following the appointment of any such successor to the Security Trustee, the retiring Security Trustee shall do and execute all acts, deeds and documents reasonably required by such successor in order to transfer to such successor Security Trustee (or its nominee, as such successor may direct) any such property, assets and rights which shall not have vested in such successor by operation of law. All such acts, deeds and documents shall be done or, as the case may be, executed at the cost of the retiring Security Trustee.

 

16.16   Change of Reference Banks

If any Reference Bank ceases to provide quotations to the Facility Agent for the purposes of determining LIBOR (where such quotations are required having regard to the definition of “LIBOR” in clause 1.2), the Facility Agent may, acting on the instructions of the Majority Lenders and with the consent of the Borrower (such consent not to be unreasonably withheld), terminate the appointment of such Reference Bank and appoint another Lender to replace such Reference Bank.

 

16.17   Powers and duties of the Security Trustee as trustee of the security

In its capacity as trustee in relation to the Facility Documents the Security Trustee:

 

16.17.1  

shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of this Agreement or any of the Facility Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Trustee by this Agreement and/or any Facility Document but so that the Security Trustee may only exercise such powers and discretions to the extent that it is authorised to do so by the provisions of this

 

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  Agreement (including specifically, but without limitation, clause 16.5.2) and, in exercising such powers and discretions, the Security Trustee shall have regard to and comply with any applicable constraints and/or restrictions imposed by this Agreement (including specifically, but without limitation, by clause 16.5.2);

 

16.17.2   shall (subject to clause 16.20 (Application of proceeds received by the Security Trustee)) be entitled to invest moneys from time to time held by it as a consequence of any enforcement of the security constituted by the Facility Documents which, in the reasonable opinion of the Security Trustee, it would not be practicable to distribute immediately, by placing the same on deposit in the name or under the control of the Security Trustee as the Security Trustee may think fit without being under any duty to diversify the same and the Security Trustee shall not be responsible for any loss due to interest rate or exchange rate fluctuations;

 

16.17.3   shall have full power to determine all questions and doubts arising in relation to the interpretation or application of any of the provisions of this Agreement or any of the Facility Documents as it affects the Security Trustee and every such determination (whether made upon a question actually raised or implied in the acts or proceedings of the Security Trustee) shall be conclusive and shall bind all the other parties to this Agreement provided however that if it is aware of the relevant question or doubt, and it is reasonably practicable to do so, the Security Trustee shall notify the Lenders of the relevant question or doubt and, if required to do so by the Majority Lenders, the Security Trustee shall consult a lawyer in relation to such question or doubt (and if the Security Trustee does so consult a lawyer, the restriction or delegation of duties and functions referred to in clause 16.17.4 below shall not apply to the consultation of the lawyer by the Security Trustee);

 

16.17.4   may, in the conduct of its obligations under and in respect of this Agreement and the Facility Documents (otherwise than, subject to the express provisions of the proviso to clause 16.17.3, in relation to its right to make any declaration, determination or decision), instead of acting personally, employ and pay any agent to act on its behalf (whether being a lawyer, chartered accountant or any other person) to transact or concur in transacting any business and to do or concur in doing any acts required to be done by the Security Trustee (including the receipt and payment of money) and on the basis that (i) any such agent engaged in any profession or business shall be entitled to be paid by the Security Trustee for all usual professional and other charges for business transacted and acts done by him or any partner or employee of his in connection with such employment and (ii) the Security Trustee shall not be bound to supervise, or be responsible for any loss incurred by reason of any act or omission of, any such agent if the Security Trustee shall have exercised reasonable care in the selection of such agent (which, without limitation, shall conclusively be deemed to be the case in respect of any agent approved in writing by the Majority Lenders); and

 

16.17.5   may place all deeds, certificates and other documents relating to the property and assets subject to the Facility Documents which are from time to time deposited with it pursuant to the Facility Documents in any safe deposit, safe or receptacle selected by the Security Trustee acting reasonably or with any firm of solicitors and may make any such arrangements as it thinks fit acting reasonably for allowing the Borrower access to, or its solicitors or auditors possession of, such documents when necessary or convenient and the Security Trustee shall not be responsible for any loss incurred in connection with any such deposit, access or possession.

 

16.18   All enforcement action through the Security Trustee

None of the Lenders shall have any independent power to enforce any of the Facility Documents or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to any of the Facility Documents or otherwise have direct recourse to the security and/or guarantees constituted by any of the Facility Documents except through the Security Trustee.

 

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16.19   Co-operation to achieve agreed priorities of application

The Lenders shall co-operate with each other and with each Agent and any Insolvency Official under the Facility Documents in realising the property and assets subject to the Facility Documents and in ensuring that the net proceeds realised under the Facility Documents after deduction of the expenses of realisation are applied in accordance with clause 8.7 (Application of payments prior to a Termination Date), clause 8.8 (Application of payments after a Termination Date) or, as the case may be, the applicable provisions of the Deed of Proceeds and Priorities.

 

16.20   Application of proceeds received by Security Trustee

Moneys received by the Security Trustee (whether from an Insolvency Official or otherwise) pursuant to the exercise of (or otherwise by virtue of the existence of) any rights and powers under or pursuant to any of the Facility Documents or pursuant to any insurance policies taken out on behalf of the Beneficiaries shall (after providing for all costs, charges, expenses and liabilities and other payments ranking in priority to the Secured Obligations) be paid to the Facility Agent for distribution in accordance with clause 8.7 (Application of payments prior to a Termination Date), clause 8.8 (Application of payments after a Termination Date) or, as the case may be, the applicable provisions of the Deed of Proceeds and Priorities.

 

16.21   Distribution of Proceeds

The Facility Agent shall make each such application and/or distribution as soon as is practicable after the relevant moneys are received by, or otherwise become available to, the Facility Agent in accordance with clause 16.20 save that (without prejudice to any other provision contained in any of the Facility Documents) the Facility Agent (acting on the instructions of the Majority Lenders) or any Insolvency Official may credit any moneys received by it to a suspense account for so long and in such manner as the Facility Agent or such Insolvency Official may from time to time determine with a view to preserving the rights of the Beneficiaries or any of them to prove for the whole of their respective claims against the Borrower or any other person liable.

 

16.22   Release of Security

The Borrower hereby agrees with the Security Trustee and the Lenders that they shall be entitled to retain the Security Documents (save for the Accounts Pledge in so far as it relates to (i) the Project Account, Proceeds Account and Earnings Account, which will be released immediately upon the Security Trustee being satisfied that the payment, repayment, performance, satisfaction and discharge in full referred to below has occurred, and (ii) the Debt Service Reserve Account, which shall be released immediately upon termination of the Security Period) for thirty (30) days after the payment, repayment, performance, satisfaction and discharge in full of all of the Secured Obligations and on the last day of such thirty (30) day period the Security Trustee shall, at the request and cost of the applicable Security Party, execute such documentation as may be required to (a) release the applicable Security Party from its obligations under the applicable Security Document, and (b) release or, where applicable, re-assign to that Security Party the security created pursuant to that Security Document and, in the case of each Power of Attorney, return the same to the Borrower in accordance with this clause 16.22 only after satisfaction and discharge in full of all the Secured Obligations, Provided however that if in the reasonable opinion of the Security Trustee or any other Beneficiary there are at that time any contingent claims by any of the Beneficiaries against the Borrower or any other Security Party under or in connection with this Agreement or any Facility Document or any likely contingent claims can be identified at that time, the Security Trustee reserves its right to retain any Security Document and delay such release (notwithstanding the expiry of such thirty (30) day period) until the earlier of (i) the date on which all such contingent claims are irrevocably and unconditionally settled in full, or fully and finally disposed of or withdrawn or discontinued and (ii) such time as the Security Trustee may deem appropriate.

 

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16.23   Facility Agent as agent for Notices

The Security Trustee hereby appoints the Facility Agent as its agent for the purposes of all or any requests, consents, instructions, directions, notices, demands or other communications which are given, made or issued by the Security Trustee under or pursuant to this Agreement and the other Facility Documents during the Security Period and all of the Lenders and the Arranger hereby approve that appointment.

 

17   Notices

 

17.1   Notices

The provisions of clause 16 of the Deed of Proceeds and Priorities shall be incorporated by reference, mutatis mutandis, in this Agreement as if all references therein to “this Deed” were references to this Agreement.

 

17.2   Notices through the Facility Agent

Every notice, request, demand or other communication under this Agreement to be given by the Borrower to any other party shall be given to the Facility Agent for onward transmission as appropriate and to be given to the Borrower shall (except as otherwise provided in this Agreement) be given by the Facility Agent.

 

18   Miscellaneous

 

18.1   No implied waivers, remedies cumulative

No failure or delay on the part of the Beneficiaries or any of them to exercise any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiaries or any of them of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in this Agreement are cumulative and are not exclusive of any remedies provided by law.

 

18.2   English translations

All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement shall be in the English language or shall be accompanied by a certified English translation upon which the Beneficiaries shall be entitled to rely.

 

18.3   Counterparts

This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original, but all counterparts shall together constitute one and the same instrument.

 

18.4   Further Assurance

The Borrower undertakes:

 

18.4.1   that this Agreement and each of the Facility Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under this Agreement and/or any of the Facility Documents be valid and binding obligations of the respective Security Parties who are parties thereto and the rights of the Beneficiaries shall be enforceable in accordance with their respective terms;

 

18.4.2   that the Borrower will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Security Trustee acting with the consent of the Majority Lenders may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents; and

 

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18.4.3   that the Borrower will use reasonable endeavours to assist the Agents to obtain any further assurance, document, act or thing as in the opinion of the Security Trustee acting on behalf of and after consultation with the Lenders may be necessary for perfecting the security constituted by the Charterer Acknowledgement provided always that if the Borrower is unable to obtain or procure any such further assurance, this shall not constitute an Event of Default on the part of the Borrower.

 

18.5   Conflicts

In the event of any conflicts between this Agreement and any other Facility Documents (other than the Deed of Proceeds and Priorities), the provisions of this Agreement shall prevail.

 

18.6   Severability of provisions

Each of the provisions of this Agreement is severable and distinct from the others and if at any time one or more of those provisions is or becomes invalid, illegal or unenforceable under the laws of any jurisdiction neither the validity, legality and enforceability of the remaining provisions of this Agreement nor the validity, legality and enforceability of those provisions in any other jurisdiction shall in any way be affected or impaired thereby.

 

19   Limited Recourse

For the avoidance of doubt, each of the Beneficiaries acknowledges its recourse to the Borrower is limited as set out in clause 22 of the Deed of Proceeds and Priorities.

 

20   Technical Adviser

 

20.1   General

Provided that (a) the Technical Adviser gives reasonable notice to the Borrower of the cooperation and assistance required, and (b) the co-operation and assistance requested by the Technical Adviser shall neither unreasonably disrupt and/or interfere with the construction or operation of the Rig and/or the Project nor involve any testing and/or other technical procedures to be carried out in respect of the Rig and/or the Project other than those required by the terms of the relevant Project Documents, the Borrower shall provide and procure that the Head Charterer provides all necessary co-operation and assistance or, as the case may be, use all reasonable endeavours to procure that the same is provided to enable the Technical Adviser:

 

20.1.1       

 

  (a)

as soon as practicable after the date hereof, to conduct an initial review and audit of the Project Documents including, without limitation, whatever is required for the Technical Adviser to confirm to the Facility Agent whether all relevant information and requirements necessary to comply with the technical requirements as agreed between the Charterer and the Head Charterer are included in the basis of design (“BoD”) of the Rig. As part of that initial review (i) engineering work executed in relation to the Rig will be audited at random to confirm that those BoD requirements have been included in the final design of the Rig, (ii) major purchase orders and the scope of work of the Builder will be reviewed to confirm all aspects have been covered adequately, (iii) all basic technical input information in relation to the Rig will be reviewed to ascertain whether the Project has commenced satisfactorily and to ascertain whether planning and the Budget are based on sound principles, (iv) the contract strategy will be analysed to confirm suitability for the execution of the Project, (v) the scope defined for the Builder, any engineering contractors and equipment sub-contractors will be reviewed to confirm suitability, (vi) the arrangements for executing the Project will be reviewed to verify that the project management team has been established professionally, (vii) the project management team will be audited to ascertain their suitability to execute a project of the magnitude of the Project, (viii) the detailed basis for establishing the time schedule of the Project will be reviewed as well as the information utilised for preparing the Budget of the Project, and the feasibility of the time schedule of the Project and Budget will be

 

97

  analysed, (ix) the anticipated risks during the construction phase of the Project will be analysed and mitigation measures reviewed, (x) the Management Agreement and Sub-Contract Agreement will be reviewed, and (xi) the project approach of the Builder will be reviewed and analysed;

 

  (b) upon completion of the initial review relating to the Rig, the Technical Adviser will provide an opinion confirming (i) the technical capacity of the Rig to reliably perform in accordance with the design criteria agreed between the Charterer and the Head Charterer (as confirmed by the Technical Adviser’s review), to meet the requirements of any Regulatory Authority and to comply with the requirements under the Charter, the Bareboat Charter and the Services Agreement, (ii) the technical aspects and project management approach (including the terms and conditions of the Management Agreement) of the Project including, without limitation, confirmation that the relevant teams and organisations have been set-up and are staffed in a manner appropriate to the management of the Project, (iii) the feasibility of the time schedule and Budget, and (iv) that the anticipated Actual Operating costs will not exceed forty five thousand Dollars ($45,000) per day during the period of twelve (12) months commencing on the date of the opinion;

 

20.1.2   from time to time (prior to and up to the Charter Date of Acceptance), to investigate any material changes proposed in respect of the Rig and/or the Project and to report to the Facility Agent about the outcome of such investigation;

 

20.1.3   from time to time prior to and up to the Charter Date of Acceptance, to review plans, schedules and progress reports (including any Project Expenditure Certificates or updated Budgets) in relation to the Rig and the Project produced by any Security Party and to report to the Facility Agent about (a) the progress of the Project up until that time including, without limitation, whether expected milestones have been reached and expected payments made, and (b) the likely future progress of the Project including, without limitation, the scheduled timing for the Charter Date of Acceptance and whether any Project Cost Over Run is likely to occur;

 

20.1.4   from time to time prior to or after the Completion Date, to:

 

  (a) notify the Facility Agent if it becomes aware of any breach by the Borrower and/or the Head Charterer and/or any material breach by any Project Counterparty of any of their respective obligations under the Project Documents, to investigate any such breach and its effects and to report to the Facility Agent about the outcome of such investigation;

 

  (b) investigate any requirements of, any restrictions imposed by or any recommendations of any Regulatory Authority (including, without limitation, the Classification Society) in connection with the Rig and/or the Project, to review compliance by the Security Parties with any such restrictions, requirements and/or recommendations and to report to the Facility Agent about the outcome of such investigation and review;

 

  (c) at the request of the Facility Agent, attend any meeting or presentation in connection with the Rig and/or the Project and to prepare any report or investigate any matter in connection with the Rig and/or the Project, in each case, as the Facility Agent may from time to time reasonably require; and

 

  (d) review, and confirm to the Facility Agent its findings, recommendations and conclusions in relation to, any claim under or in respect of the Insurances or the Rig Rights in an amount in excess of the Casualty Amount.

 

20.2   Acceptance

Provided that (a) the Technical Adviser gives reasonable notice to the Borrower of the cooperation and assistance required, and (b) the co-operation and assistance requested by the Technical Adviser shall neither unreasonably disrupt and/or interfere with the operation of the Rig and/or the Project nor involve any testing and/or other technical procedures to be carried out in respect of the Rig and/or the Project other than those required by the terms of the relevant

 

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Project Documents, the Borrower shall provide all necessary co-operation and assistance or, as the case may be, use all reasonable endeavours to procure that the same is provided to enable the Technical Adviser to consult with the Security Parties and, where required, to inspect the Rig to enable the Technical Adviser to confirm in writing to the Facility Agent that:

 

20.2.1   on or prior to the Date of Yard Acceptance:

 

  (a) the Rig complies with the Specifications, complies with the requirements of the Construction Contract and is otherwise in a condition suitable for acceptance;

 

  (b) adequate measures, arrangements and procedures have been introduced by the Head Charterer, the Borrower and the Sponsor for the maintenance and operation of the Rig in accordance with good industry standards and in accordance with their respective obligations under the Charter, Bareboat Charter and Services Agreement respectively;

 

  (c) no breach by the Head Charterer, the Borrower, the Sponsor and/or no material breach by the Builder of any of their respective obligations under the Project Documents has occurred and is continuing unremedied;

 

  (d) all applicable requirements of any Regulatory Authority (including, without limitation, the Classification Society) in connection with the Rig and/or the Project have been satisfied,

and, prior to the Date of Yard Acceptance, the Technical Adviser will provide an opinion as to each of the matters referred to in this clause 20.2.1; and

 

20.2.2   as a condition precedent to the Completion Date:

 

  (a) acceptance of the Rig has occurred in accordance with the provisions of the Charter;

 

  (b) all consents, authorisations, licences, approvals and permits then required in connection with the Rig and/or the Project pursuant to any Environmental Law have been obtained;

 

  (c) all documentation then required to be provided by the Head Charterer, the Borrower and the Sponsor pursuant to the Bareboat Charter, Charter and Services Agreement, respectively, has been duly prepared and provided;

 

  (d) all concerns raised by the Technical Adviser in relation to the matters referred to in this clause 20.2 have been addressed to the reasonable satisfaction of the Technical Adviser; and

 

  (e) no breach by the Head Charterer, the Borrower, the Sponsor and/or no material breach by the Builder of any of their respective obligations under the Project Documents has occurred and is continuing unremedied

(the written confirmation referred to in clause 20.2.2 , the “Yard Acceptance Confirmation”).

 

20.3   Reporting

The Facility Agent shall, promptly following the receipt by it of any report, notification or confirmation referred to in this clause 20, forward a copy of that report, notification or confirmation to each of the Lenders and the Borrower.

 

20.4   Actual Operating Costs

 

20.4.1   The Borrower shall provide the Technical Adviser with details of amounts which are to be claimed as Actual Operating Costs (including any supporting information reasonably requested by the Technical Adviser):

 

  (a) on the last Banking Day of the sixth month after the Initial Charter Hire Date and then on the last Banking Day of every subsequent period of six (6) months occurring within the Security Period; and

 

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  (b) following a request by the Facility Agent (acting reasonably) prior to a distribution being made under clause 5.2.8 of the Deed of Proceeds and Priorities.

 

20.4.2   The Facility Agent shall request that the Technical Adviser promptly reviews the details provided pursuant to clause 20.4.1 and confirms to the Facility Agent whether the amount claimed in relation to Actual Operating Costs is equal to the actual amount of Actual Operating Costs.

 

21   Governing law and jurisdiction

 

21.1   Law

This Agreement shall be governed by English law.

 

21.2   Submission to jurisdiction

The Borrower agrees for the benefit of the Beneficiaries that:

 

21.2.1   if the Borrower has any claim against any other arising out of or in connection with this Agreement such claim shall (subject to clause 21.2.3) be referred to the High Court of Justice in England, to the jurisdiction of which the Borrower irrevocably submits;

 

21.2.2   the jurisdiction of the High Court of Justice in England over any such claim against the Beneficiaries shall be an exclusive jurisdiction and no courts outside England shall have jurisdiction to hear or determine any such claim; and

 

21.2.3   nothing in this clause 21.2 shall limit the right of the Beneficiaries to refer any such claim against the Borrower to any other court of competent jurisdiction outside England, to the jurisdiction of which the Borrower hereby irrevocably agrees to submit, nor shall the taking of proceedings by the Beneficiaries before the courts in one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not.

 

21.3   Agent for service of process

 

21.3.1   The Borrower irrevocably designates, appoints and empowers Messrs Xxxxxx Xxxxxxxx Xxxxxxx at its principal place of business in England from time to time (at present Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX) Attention: N J Davies to receive for it and on its behalf service of process issued out of the High Court of Justice in England in relation to any claim arising out of or in connection with this Agreement.

 

21.3.2   The Borrower agrees that it will at all times continuously maintain an agent to receive service of process in England on its behalf and on behalf of its property with respect to this Agreement and the other Transaction Documents and if, for any reason, such agent named above or its successor shall no longer serve as agent of the Borrower to receive service of process in England, the Borrower shall promptly appoint a successor in England and advise the Facility Agent and the Security Trustee thereof.

IN WITNESS whereof this Deed has been duly executed and delivered as a deed by the parties hereto on the date first above written.

 

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Schedule 1

The Lenders and their Commitments

 

(1)    (2)    (3)  

Name

   

Address and facsimile number

   

Commitment $

  

ING Bank N.V.

   

Bijlmerplein 888

    $ 310,000,000   
  

1102 MG Amsterdam

   
  

The Netherlands

   
  

 

x00 00 000 0000

   

 

101

Schedule 2

Form of Drawdown Notice for Principal Advances/Intercompany Construction

Interest Advance/Swap Advances

 

To: ING Bank N.V.

Xxxxxxxxxxxx 000

0000 XX Xxxxxxxxx

Xxx Xxxxxxxxxxx

Attention:

[—]

US$310,000,000 Project Loan Facility Agreement dated 13 February 2008 (the “Agreement”)

We refer to the Agreement and hereby give you notice that we wish to draw down [the First Intercompany Hull Advance] [the Intercompany Construction Principal Advance] [the Intercompany Construction Interest Advance] [a Principal Construction Advance] [the Second Intercompany Hull Advance] [a Swap Advance], namely [—] million Dollars ($[—]) on [—]. The funds should be credited to the Project Account no later than 11.00 a.m. on that date.

We confirm that:

 

(i) no event or circumstance has occurred and is continuing which constitutes a Default;

 

(ii) the Repeating Representations and warranties contained in clause 9 of the Agreement and the representation and warranty in clause 9.12, referring for this purpose to the audited financial statements in respect of the financial year ended on 31 December [—]/30 June [—], are true and correct at the date of this notice as if made with respect to the facts and circumstances existing at the date of this notice; and

 

(iii) the borrowing to be effected by [the First Intercompany Hull Advance] [the Intercompany Principal Construction Advance] [the Intercompany Construction Interest Advance] [such Principal Construction Advance] [the Second Intercompany Hull Advance] [such Swap Advance] will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded.

Words and expressions defined in the Agreement shall have the same meanings where used in this notice.

For and on behalf of

Olinda Star Ltd.

 

 

  

 

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Schedule 3

Conditions Precedent

Part 1 - Documents and evidence required as conditions precedent to the obligations of the

Beneficiaries generally

 

1 Constitutive Documents and corporate authorities

In respect of each of the Borrower, the Sponsor, the Head Charterer and Constellation:

 

  (a) a copy certified by a duly authorised officer of the relevant person to be a true, complete and up-to-date copy, of the Constitutive Documents (in the case of the Sponsor, with evidence of registration of the same with the Board of Trade and publication in accordance with Articles 135 and 142 of the Corporations Law of Brazil) of that person together with a certified extract from the commercial register or, as the case may be, a certificate of good standing in respect of that person;

 

  (b) a copy, certified by a duly authorised officer of the relevant person to be a true copy, and as being in full force and effect and not amended or rescinded, of resolutions of the board of directors or governors or managing partner (or of a committee of the board of directors or governors or managing partner) and/or the resolutions of the shareholders, if required of that person (in the case of the Sponsor, with evidence of registration of the same with the Board of Trade and publication in accordance with Articles 135 and 142 of the Corporations Law of Brazil):

 

  (i) approving the entering into by the relevant person of the transaction as constituted by the rights and obligations of the relevant person under the Transaction Documents to which that person is (or is to be) party;

 

  (ii) authorising the execution by that person of such of this Agreement and the other Transaction Documents to which such person is party; and

 

  (iii) authorising an individual or individuals to sign and deliver on behalf of that person such of this Agreement and the other Transaction Documents to which such person is party;

 

  (c) a copy certified by a duly authorised officer of that person to be a true copy, and as being in full force and effect and not revoked or withdrawn, of any power of attorney issued by that person pursuant to the said resolutions;

 

  (d) a certificate of incumbency; and

 

  (e) in the case of the Sponsor, a valid certificate issued by the court distributor with jurisdiction over the place of business of the Sponsor attesting the inexistence of bankruptcy and/or judicial recuperation claims filed by or against them.

 

2 Authorisations and approvals

 

  (a) Evidence satisfactory to the Agents (in the form of a confirmatory certificate from each of the parties referred to in paragraph 1 above) that all Authorisations necessary for any matter or thing contemplated by the Facility Documents, the Project Documents and the Hedging Agreements (in each case to which the applicable Security Party is a party) and for the legality, validity, enforceability, priority, admissibility in evidence and effectiveness thereof, at the time the same are required, have been obtained or effected on an unconditional basis and remain in full force and effect (including, but without limitation to the generality of this paragraph, the Letter of Authorisation in respect of the Charter) (or, in the case of any necessary arrangements effecting any future Authorisations, registrations and filings, that arrangements which are satisfactory to the Facility Agent have been made for the effecting of the same within any applicable time limit);

 

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  (b) Evidence satisfactory to the Agents in the form of a confirmatory certificate from each of the parties referred to in paragraph 1 above that any Authorisations which may be required for the due execution and performance of any Security Party of any Transaction Document to which it is party at the time the same are required have been obtained and are in full force and effect;

 

  (c) Evidence satisfactory to the Agents that each Security Document (other than the Borrower Share Pledge, the Head Charterer Partnership Pledge, the Accounts Pledge, the Deed of Proceeds and Priorities and the General Assignment) has been (i) translated into Portuguese by a sworn public translation, and (ii) registered with the competent Registry of Deeds and Documents; and

 

  (d) A certified copy of the Register of Charges of each of the Borrower and Constellation, stamped as filed at the Registry of Corporate Affairs in the British Virgin Islands containing details of each of the Security Documents to which it is a party.

 

3 Transaction Documents

 

  (a) An original counterpart of this Agreement and each Facility Document (other than those referred to in paragraph (b) below) duly executed and delivered by each Security Party which is party thereto as well as all evidence that notices, acknowledgements, authorisations, invoices and certificates required thereunder have been duly executed and delivered.

 

  (b) A copy of the Agreed Form of each of the Facility Documents (which, for the avoidance of doubt, shall include the Receivables Acknowledgement and the Charterer Acknowledgement) which it is agreed in writing by the Facility Agent prior to the date of this Agreement shall be executed after the date of this Agreement.

 

  (c) An original of the Mortgage (duly notarised) together with a certificate from the Borrower confirming that, other than by virtue of the Facility Documents, the Borrower has not created any Encumbrance over its Secured Property.

 

  (d) A copy of each Project Document which has been executed at the applicable time certified as a true and complete copy thereof by a duly authorised officer of the relevant Security Party which is a party thereto.

 

  (e) A certificate from each Security Party confirming that each of the Project Documents and the other Transaction Documents (other than this Agreement and the Security Documents) to which it is a party which have then been executed, remain unamended and in full force and effect, (save for Permitted Amendments previously disclosed in writing to the Agents).

 

  (f) A copy, certified as a true copy by a duly authorised officer of the relevant Security Party of each of the other Transaction Documents (other than this Agreement, the Facility Documents and the Project Documents) to which it is a party as well as evidence that all notices, acknowledgements, authorisations, invoices and certificates required thereunder have been duly executed and delivered together with a certified copy thereof.

 

  (g) Evidence, satisfactory to the Agents that the Charterer has been duly authorised to enter into the consent referred to in paragraph 2(a) above.

 

  (h) A duly executed original of the Builder Acknowledgement and evidence satisfactory to the Agents that the Builder have been duly authorised to enter into and has validly executed the Builder Acknowledgement.

 

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4 Legal opinions

Legal opinions in form and content satisfactory to the Lenders from:

 

  (a) Xxxxxx Xxxx, Netherlands counsel to the Lenders in relation to, inter alia, the Head Charterer, the Head Charterer Partnership Pledge, the Accounts Pledge and the security granted in favour of the Security Trustee;

 

  (b) Xxxxxx and Calder, British Virgin Island counsel to the Lenders, in relation to, inter alia, the Borrower, Constellation and the Borrower Share Pledge; and

 

  (c) Xxxxx and Xxxxx, Brazilian counsel to the Lenders, in relation to, inter alia, the Sponsor, Mauá Jurong S.A. and the Builder Acknowledgement;

 

  (d) Xxxxxx & Xxxxxx, Delaware counsel to the Lenders, in relation to, inter alia, Mauá Jurong LLC and the Builder Acknowledgement;

 

  (e) Xxxxx & Xxxxxxx, Bahamas counsel to the Lenders, in relation to, inter alia, the Parent Guarantor;

 

  (f) Xxxxxx Xxxx, English counsel to the Lenders, in relation to, inter alia, the Facility Documents; and

 

  (g) Xxxxxx & Xxxxxx, Liberian counsel to the Lenders, in relation to the registration of the ownership of the Rig and the Mortgage.

 

5 Accounts and financial information

 

  (a) Copies of (i) the most recent annual audited accounts of each of the Sponsor, Constellation, the Borrower and the Head Charterer and (ii) the most recent unaudited accounts of the Sponsor, Constellation, the Borrower and the Head Charterer.

 

  (b) Evidence that each of the Accounts have been opened and that all necessary bank mandates and signature forms in form and content acceptable to the Agents have been delivered to the Account Bank and that $1 has been credited to each such account.

 

  (c) Evidence acceptable to the Agents that all fees then due to the Arranger, the Facility Agent and the Security Trustee and any applicable commitment commission then due have been paid in full or, as the case may be, arrangements satisfactory to the Agents for the payment of such fees have been put in place.

 

6 Process agents

Evidence of the acceptance of appointment by each service of process agent appointed or required to be appointed under this Agreement and the Facility Documents (other than those referred to in paragraph 3(b)).

 

7 Transaction Documents conditions precedent

A certificate from the Borrower confirming that the conditions precedent to the Transaction Documents which have been executed (other than the conditions precedent contained in this Agreement and the conditions precedent in the Charter, Bareboat Charter and the Services Agreement which cannot be satisfied until the Charter Date of Acceptance) have been fulfilled or waived in accordance with the respective terms of the Transaction Documents.

 

8 Information Memorandum

The Information Memorandum, duly completed and approved by the Borrower and the Sponsor.

 

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9 Charter and Services Agreement

Certified English language translations of the Charter and the Services Agreement.

 

10 Technical Advisor

Written confirmation from the Technical Adviser that each of the requirements of paragraphs (a) and (b) of clause 20.1.1 are satisfied.

 

11 Budget and time schedule

A Budget and the time schedule in relation to the Project, each in a form satisfactory to the Facility Agent.

 

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Part 2 - Conditions Precedent to Drawdown of the First Advance

 

1 Constitutive Documents and corporate authorisations

A certificate from a duly authorised officer of each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 confirming that there has been no change in the Constitutive Documents of the relevant person since the date on which a certified copy thereof was provided to the Agents pursuant to part 1 of this Schedule 3 or, as the case may be, a copy certified by a duly authorised officer of the relevant person of any amendments thereto and confirmation that the board resolutions, powers of attorney or other corporate authorisation referred to in paragraphs 1(b) and 1(c) of part 1 of this Schedule 3 remain unamended and in full force and effect.

 

2 No Defaults

A certificate from a duly authorised officer of the Borrower and the Sponsor confirming that no Default has occurred and is continuing or would result from the payment of the applicable First Advance.

 

3 Legal opinions

If requested by the Facility Agent (acting on the instructions of the Majority Lenders (acting reasonably)), confirmation from such of the counsel to the Lenders referred to in paragraph 4 of part 1 of this Schedule 3 as may be nominated by the Facility Agent in that request that the terms and provisions of the legal opinions provided by them pursuant to that paragraph 4 of part 1 of this Schedule 3 need not be altered or modified in any way.

 

4 [intentionally omitted]

 

5 Fees

Confirmation from the Agents that all fees then due to the Arranger and the Agents have been paid in full or, as the case may be, evidence acceptable to the Agents that arrangements satisfactory to the Agents for the payment of such fees have been put in place.

 

6 Project Documents

A certificate from each member of the Group which is a party to the Facility Documents and the Project Documents which have been executed prior to the Drawdown Date for the First Advance and the other Transaction Documents which have then been executed confirming that those documents to which the relevant member of the Group is a party remain unamended (other than Permitted Amendments) and in full force and effect.

 

7 Representation and warranties

A certificate from each Security Party confirming that each of the Repeating Representations on the part of or, as the case may be, Continuing Representations relating to, each such party referred to in paragraph 1 above under this Agreement or any of the Facility Documents which have been executed prior to the Drawdown Date for the First Advance are true and accurate on the date on which the Drawdown Notice for the First Advance is issued and will be true and accurate on the Drawdown Date for the First Advance as if given on each such date by reference to the facts and circumstances then existing.

 

8 Confirmation from the Technical Adviser

A certificate from the Technical Adviser confirming that no material event of default or potential event of default under the Project Documents has occurred and is continuing and that the Technical Advisor has no material concerns in respect of any of the matters referred to in clause 20.1.

 

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9 Interest hedging

A certified true copy of the Hedging Agreements evidencing that ninety five per cent. (95%) of the interest exposure under this Agreement has been hedged on terms satisfactory to the Facility Agent by the Borrower.

 

10 Amount of the First Advance

A certificate from a duly authorised officer of the Borrower confirming that:

 

  (a) any Existing Project Cost Over Run is less than thirty five million Dollars ($35,000,000); and

 

  (b) the amount of the First Advance (provided that the First Advance is not the First Intercompany Hull Advance, which will be in an amount not exceeding an amount determined in accordance with clause 3.2.3(a)(iii)) (as specified in the applicable Drawdown Notice) does not exceed the amount equal to the Project Cost, calculated by taking into account (i) Project Cost paid or incurred by the Borrower prior to the date of that certificate, and (ii) to the best of the knowledge and belief of the Borrower, Project Cost to be incurred by the Borrower and which will become payable on or prior to the date falling ninety (90) days after the date of that certificate, in each case in accordance with the terms of the relevant Project Documents,

provided however that the aggregate amount of Project Cost referred to in paragraph (ii) above shall not exceed ten million Dollars ($10,000,000).

 

11 [intentionally omitted]

 

12 [intentionally omitted]

 

13 Project Expenditure Certificate

A duly completed Project Expenditure Certificate, dated no earlier than the Drawdown Notice requesting the First Advance.

 

14 Principal Balances

Evidence satisfactory to the Facility Agent of each of the Principal Hull Balance and the Principal Construction Balance and agreement by the Facility Agent of the amount of each of the Principal Hull Balance and the Principal Construction Balance.

 

15 Insurances

 

  (a) Evidence satisfactory to the Agents that the insurance obligations of the Security Parties under the Security Documents and under the applicable Project Documents have been complied with and that the Rig is insured in accordance with the terms of the Security Documents and the Project Documents (being the Bareboat Charter, Charter and Services Agreement).

 

  (b) Receipt by the Agents of letters of undertaking from the Approved Brokers and the mutual associations or clubs with which the protection and indemnity and/or, as the case may be, war risks insurances are placed, if and to the extent that such insurances are required under the relevant provisions of the Security Documents and Project Documents.

 

  (c) Receipt by the Agents of certified true copies of the policies and/or certificates of entry in respect of the insurance cover for the Rig referred to in clause 9 of the General Assignment.

 

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  (d) Evidence that all premia and calls in respect of the Insurances which have fallen due have been paid and that none of the Security Trustee or other Beneficiaries have any liability for premia and calls.

 

  (e) Evidence that the insurers have agreed that they have no right of subrogation and/or contribution against the Charterer or the Borrower.

 

  (f) An opinion in form and content satisfactory to the Lenders from the Insurance Consultant, as to the adequacy of the Insurances and the mortgagees interest insurance cover referred to in paragraph (d) above.

 

  (g) A list of the insurers effective for the first period from the date of the First Advance up to the end of the policy year in which the date of the First Advance occurs and thereafter for the twelve (12) month period from such date has been provided by the Approved Brokers.

 

16 Registration of the Mortgage, filings, consents, approvals and confirmations in relation to Encumbrances

 

  (a) A transcript of register from the Flag State evidencing the registration of the Rig in the name of the Borrower free from Encumbrances other than the Mortgage in favour of the Security Trustee for and on behalf of the Beneficiaries.

 

  (b) Evidence that arrangements satisfactory to the Agents have been made for effecting the filing or registration of the Mortgage in any applicable jurisdiction, and within any applicable time limit.

 

  (c) A certificate from the Borrower confirming that all Authorisations necessary for any act or thing contemplated by the Mortgage for the legality, validity, enforceability, priority and admissibility in evidence and effectiveness thereof have been obtained or effected on an unconditional basis and remain in full force and effect, save that the Mortgage shall be (i) translated into Portuguese by a sworn public translation, and (ii) registered with the competent Registry of Deeds and Documents within sixty (60) days of the date of this Agreement.

 

17 Rig documents

 

  (a) A copy of the certificate of Classification or, as the case may be, an interim class certificate in relation to the Rig issued by the Classification Society.

 

  (b) The ISS Certificate, where applicable, in relation to the Rig.

 

18 Hull Value

Each of Tecnitas do Brasil, Fearnley Offshore LLC and X.X. Xxxxxx USA shall have provided to the Facility Agent a market valuation of the Hull in order to enable the Facility Agent to determine the Hull Value.

 

19 Interim Payments

If the First Advance is a Principal Construction Advance which is to be used to reimburse Constellation for an Interim Payment, evidence satisfactory to the Facility Agent of that Interim Payment.

 

109

Part 3 - Conditions Precedent to Drawdown of any Subsequent Advance

 

1 First Advance

In relation to the first Subsequent Advance made to the Borrower, the First Advance shall have been made. In relation to any Subsequent Advance thereafter, the immediately preceding Subsequent Advance shall have been made.

 

2 Constitutive Documents and corporate authorisations

A certificate from a duly authorised officer of each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 confirming that there has been no change in the Constitutive Documents of the relevant person since the date of the last confirmation delivered pursuant to paragraph 1 of part 2 of this Schedule 3 or, as the case may be, a copy certified by a duly authorised officer of the relevant person of any amendments thereto and confirmation that the board resolutions, powers of attorney or other corporate authorisation referred to in paragraphs 1(b) and 1(c) of part 1 of this Schedule 3 remain unamended and in full force and effect.

 

3 No Defaults

A certificate from a duly authorised officer of each of the Borrower and the Sponsor confirming that no Default has occurred and is continuing or would result from the payment of the relevant Subsequent Advance.

 

4 Legal opinions

If requested by the Facility Agent (acting on the instructions of the Majority Lenders (acting reasonably)), confirmation from such of the counsel to the Lenders referred to in paragraph 4 of part 1 of this Schedule 3 as may be nominated by the Facility Agent in that request that the terms and provisions of the legal opinions provided pursuant to paragraph 4 of part 1 of this Schedule 3 need not be altered or modified in any way.

 

5 [intentionally omitted]

 

6 Fees

Confirmation from the Agents that (a) all fees due to the Arranger or the Agents and payable on or during the period up to the Drawdown Date for the relevant Subsequent Advance, and (b) any Commitment Fee due and payable for the period up to the Commitment Fee Date which immediately precedes that Drawdown Date have been paid in full or, as the case may be, arrangements satisfactory to the Agents for the payment of such fees have been put in place.

 

7 Project Documents

A certificate from each member of the Group which is a party to the Facility Documents, the Project Documents and the other Transaction Documents which have then been executed confirming that those documents to which the relevant member of the Group is a party remain unamended (other than Permitted Amendments) and in full force and effect.

 

8 Representations and warranties

A certificate from each party referred to in paragraph 2 above confirming that each of the Repeating Representations on the part of or, as the case may be, Continuing Representations relating to, each such party under this Agreement or any of the Facility Documents which have been executed prior to the Drawdown Date for the relevant Subsequent Advance are true and accurate on the date on which the Drawdown Notice for the relevant Subsequent Advance is issued and will be true and accurate on the Drawdown Date for the relevant Subsequent Advance as if given on each such date by reference to the facts and circumstances then existing.

 

110

9 Amount of relevant Subsequent Advance

A certificate from a duly authorised officer of the Borrower confirming that:

 

  (a) any Existing Project Cost Over Run is less than thirty five million Dollars ($35,000,000); and

 

  (b) the amount of that Subsequent Advance (provided that such a Subsequent Advance is not the First Intercompany Hull Advance and/or the Second Intercompany Hull Advance, which will be an amount not exceeding an amount determined in accordance with clause 3.2.3(a)(iii) and clause 3.2.3(c)(iii) respectively) (as specified in the applicable Drawdown Notice) when aggregated with all other Principal Advances made or to be made on or prior to the Drawdown Date of that Subsequent Advance, does not exceed the amount equal to Project Cost, calculated by taking into account (i) Project Cost paid or incurred by the Borrower prior to the date of that certificate, and (ii) to the best of the knowledge and belief of the Borrower, Project Cost to be incurred by the Borrower and which will become payable on or prior to the date falling ninety (90) days after the date of that certificate, in each case in accordance with the terms of the relevant Project Documents,

provided however that the aggregate amount of Project Cost referred to in paragraph (ii) above shall not exceed ten million Dollars ($10,000,000).

 

10 [intentionally omitted]

 

11 Project Expenditure Certificate

A duly completed Project Expenditure Certificate dated no earlier than the Drawdown Notice requesting that Subsequent Advance.

 

12 Interim Payments

If that Subsequent Advance is a Principal Construction Advance which is to be used to reimburse Constellation for an Interim Payment, evidence satisfactory to the Facility Agent of that Interim Payment.

 

111

Part 4 - Conditions Precedent to the Date of Yard Acceptance

 

1 Constitutive Documents and corporate authorities

Confirmation from a duly authorised officer of each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 that there has been no change in the Constitutive Documents of the relevant person since the date of the last confirmation delivered pursuant to Part 3 paragraph 2 of this Schedule 3, as the case may be, a copy certified by a duly authorised officer of the relevant person of any amendments thereto and confirmation that the board resolutions, powers of attorney and other corporate authorisation referred to in paragraphs 1(b) and 1(c) of part 1 of this Schedule 3 remain unchanged and in full force and effect.

 

2 Documents

 

  (a) A certificate from the Borrower confirming that, other than by virtue of the Facility Documents, the Borrower has not created any Encumbrance over its Secured Property.

 

  (b) A certificate from each Security Party which is a party to the Project Documents, the Facility Documents and the other Transaction Documents confirming that those documents to which it is a party remain unamended (other than Permitted Amendments) and in full force and effect.

 

  (c) A copy, certified as a true copy by a duly authorised officer of the Borrower of the agreed drafts of each of the Delivery Documents.

 

  (d) An executed original of the Notice of Assignment of Insurances in the form of Schedule 1, Part 1 of the General Assignment.

 

3 Legal opinions

If requested by the Facility Agent (acting on the instructions of the Majority Lenders (acting reasonably)) confirmation from such of the counsel to the Lenders referred to in paragraph 4 of part 1 of this Schedule 3 as may be nominated by the Facility Agent in that request that the terms and provisions of the legal opinions provided pursuant to paragraph 4 of part 1 of this Schedule 3 need not be altered or modified in any way.

 

4 Filings, consents, approvals and confirmations in relation to Encumbrances

 

  (a) Evidence that arrangements satisfactory to the Agents have been made for effecting the filing or registration of each of the Security Documents in any applicable jurisdiction, and within any applicable time limit.

 

  (b) A certificate from each of the Borrower and the Sponsor confirming that upon delivery by the Builder the Rig will be absolutely free and clear of any liens, charges, debts, claims or other encumbrances arising in favour of the Builder (or either of them) or any of their respective sub-contractors and employees.

 

  (c) A certificate from the Borrower confirming that all Authorisations necessary for any act or thing contemplated by any Security Document for the legality, validity, enforceability, priority and admissibility in evidence and effectiveness thereof have been obtained or effected on an unconditional basis and remain in full force and effect.

 

  (d) A certificate from each of the Security Parties confirming that any Authorisations which may be required for the due execution and performance by any Security Party of any Transaction Documents to which it is party at the time the same are required have been obtained and are in full force and effect.

 

112

5 Rig documents

 

  (a) A copy of the certificate of Classification (and for this purpose the proviso to the definition of Classification shall be disregarded).

 

  (b) The ISS Certificate, where applicable, in relation to the Rig.

 

6 Insurances

 

  (a) Evidence satisfactory to the Agents that the insurance obligations of the Security Parties under the Security Documents and under the applicable Project Documents have been complied with and that the Rig is insured in accordance with the terms of the Security Documents and the Project Documents (being the Bareboat Charter, Charter and Services Agreement).

 

  (b) Receipt by the Agents of letters of undertaking from the Approved Brokers and the mutual associations or clubs with which the protection and indemnity and/or, as the case may be, war risks insurances are placed.

 

  (c) Receipt by the Agents of certified true copies of the policies and/or certificates of entry in respect of the insurance cover for the Rig referred to in clause 9 of the General Assignment.

 

  (d) Evidence satisfactory to the Agents that (i) mortgagees interest insurance cover has been taken out by the Security Trustee for the benefit of the Beneficiaries in accordance with clause 9.2 of the General Assignment and (ii) payment of such cost has been reimbursed to the Security Trustee.

 

  (e) Evidence that all premia and calls in respect of the Insurances which have fallen due have been paid and that none of the Security Trustee or other Beneficiaries have any liability for premia and calls.

 

  (f) Evidence that the insurers have agreed that they have no right of subrogation and/or contribution against the Charterer or the Borrower.

 

  (g) An opinion in form and content satisfactory to the Lenders (each acting reasonably) from the Insurance Consultant to the Lenders, as to the adequacy of the Insurances and the mortgagees interest insurance cover referred to in paragraph 6(d) above.

 

  (h) A list of the insurers effective for the first period from the Date of Yard Acceptance up to the end of the policy year in which the Date of Yard Acceptance occurs and thereafter for the twelve (12) month period from such date has been provided by the Approved Brokers.

 

7 Representation and warranties

A certificate from each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 confirming that each of the Repeating Representations on the part of or, as the case may be, Continuing Representations relating to, each such party under any Security Document will be true and accurate on the Date of Yard Acceptance by reference to the facts and circumstances then existing.

 

8 Process agents

Evidence of the acceptance of appointment by each service of process agent appointed or required to be appointed under the Security Documents.

 

9 Technical Adviser

Receipt by the Agents of the opinion of the Technical Adviser pursuant to clause 20.2.1 of this Agreement.

 

113

10 Bareboat Charter

Evidence satisfactory to the Agents that the Head Charterer has accepted delivery of the Rig on the Charter Date of Acceptance under the Bareboat Charter and that the Bareboat Charter is in full force and effect.

 

114

Part 5 - Conditions Precedent to Completion Date

 

1 Constitutive Documents and corporate authorities

Confirmation from a duly authorised officer of each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 that there has been no change in the Constitutive Documents of the relevant person since the date of the last confirmation delivered pursuant to paragraph 1 of Part 4 of this Schedule 3, as the case may be, a copy certified by a duly authorised officer of the relevant person of any amendments thereto and confirmation that the board resolutions, powers of attorney and other corporate authorisation referred to in paragraphs 1(b) and 1(c) of part 1 of this Schedule 3 remain unchanged and in full force and effect.

 

2 Authority of the Charterer and Receivables Acknowledgement

In respect of the Charterer, a duly executed original of the Receivables Acknowledgement and evidence satisfactory to the Agents that the Charterer has been duly authorised to enter into and has validly executed the Receivables Acknowledgement and, if applicable, the Charterer Acknowledgement.

 

3 Documents

 

  (a) A certificate from each relevant Security Party confirming that, other than by virtue of the Facility Documents, the relevant Security Party has not created any Encumbrance over its Secured Property;

 

  (b) A certificate from each Security Party which is a party to the Project Documents, the Facility Documents and the other Transaction Documents confirming that those documents remain unamended (other than Permitted Amendments) and in full force and effect.

 

4 Legal opinions

Legal opinions or, as the case may be, confirmations in form and content satisfactory to the Lenders from:

 

  (a) Xxxxxx Xxxx, Netherlands counsel to the Lenders in relation to, inter alia, the Head Charterer, the Head Charterer Partnership Pledge, the Accounts Pledge and the security granted in favour of the Security Trustee;

 

  (b) Xxxxxx and Calder, British Virgin Island counsel to the Lenders, in relation to, inter alia, the Borrower, Constellation and the Borrower Share Pledge; and

 

  (c) Xxxxx and Xxxxx, Brazilian counsel to the Lenders, in relation to, inter alia, the Sponsor, Mauá Jurong S.A. and the Builder Acknowledgement;

 

  (d) Xxxxxx Xxxx, English counsel to the Lenders, in relation to, inter alia, the Facility Documents; and

 

  (e) Xxxxxx & Xxxxxx, Liberian counsel to the Lenders, in relation to the registration of the ownership of the Rig and the Mortgage.

 

5 Registration of the Mortgage, filings, consents, approvals and confirmations in relation to Encumbrances

 

  (a) A transcript of register from the Flag State evidencing the registration of the Rig in the name of the Borrower free from Encumbrances other than the Mortgage in favour of the Security Trustee for and on behalf of the Beneficiaries.

 

115

  (b) A certificate from each of the Security Parties confirming that any Authorisations which may be required for the due execution and performance by any Security Party of any Transaction Documents to which it is party at the time the same are required have been obtained and are in full force and effect.

 

6 Insurances

Evidence satisfactory to the Agents that the insurance provisions specified in clause 9 of the General Assignment are being complied with.

 

7 Project information

 

  (a) A certificate from the Borrower confirming that (i) the conditions precedent to the obligations of the Charterer and the Borrower under the Charter and the obligations of the Charterer and the Sponsor under the Services Agreement have been fulfilled or waived in accordance with the terms thereof and (ii) the Charter Date of Acceptance has occurred in accordance with the provisions of the relevant Project Documents and (iii) the Charterer has accepted the Rig in accordance with the terms of the relevant Project Documents.

 

  (b) A (duly translated) copy of the ROF required to enable payments of the Charter Rate under the Charter (or other evidence satisfactory to the Lenders that the same has been issued) together with evidence satisfactory to the Lenders that it is and remains in full force and effect.

 

  (c) Either (i) written confirmation from the Charterer either (a) confirming that the imposition of tax on the importation of the Rig into Brazil (“ICMS”) entitles the Borrower or, as the case may be, the Sponsor to be compensated and reimbursed by the Charterer for any payment by the Borrower or, as the case may be, the Sponsor of ICMS and that accordingly the Charterer agrees to compensate and reimburse the Borrower or, as the case may be, the Sponsor for an amount equal to the total amount of ICMS which has been paid by the Borrower or, as the case may be, the Sponsor to the applicable Brazilian tax authority or (b) confirming that the Charterer will import the Rig itself and be responsible for any payment of ICMS or (c) confirming that the Charterer will be responsible for any payment of ICMS itself notwithstanding the importation of the Rig into Brazil by the Borrower or, as the case may be, the Sponsor or (ii) the Facility Agent has received written confirmation from legal counsel acceptable to it that ICMS will not be imposed and/or applicable to the importation of the Rig into Brazil.

 

  (d) Evidence satisfactory to the Agents that the Borrower has directed the Charterer to pay all Charter Rate and other Earnings to the Earnings Account.

 

  (e) Confirmation from the Borrower of the date on which the Rig arrived at a port, or in sheltered waters, in Brazil specified in clause 2.3 of the Charter and, if such arrival is after the date stipulated in clause 2.2.1 of the Charter, evidence satisfactory to the Lenders setting out the details of any reduction in the Charter Rate incurred or to be incurred or any fine levied or to be levied as a consequence of the late arrival of the Rig and the Sponsor or Constellation will perform any obligations they may have pursuant to clause 4 of the Pre-Completion Guarantee.

 

  (f) Certificates from the Borrower and the Sponsor confirming that all Authorisations required for the operation of the Rig at the Approved Location have been given, issued, made or acquired together with a copy, certified by the Borrower, of each of the Authorisations required for the operation of the Rig at the Approved Location.

 

  (g) A certificate from the Borrower confirming that all Authorisations required for the chartering of the Rig to the Charterer have been made or obtained.

 

  (h) A certificate from the Borrower confirming the exact location of the Rig.

 

116

  (i) A certificate from an officer of the Sponsor confirmed by the Technical Adviser (upon receipt by the Technical Adviser of the necessary information provided by the Sponsor) confirming that on the Completion Date the aggregate of the Principal Advances will be less than or equal to seventy point nine per cent. (70.9%) of the Total Cost.

 

  (j) A certificate from each of the Borrower and the Sponsor confirming that no Force Majeure Event has occurred which is continuing and that the Charterer has not given notice of the occurrence of any event or circumstance giving rise to a right on the part of the Charterer to terminate (i) the Charter pursuant to clause 11.1 of the Charter and/or (ii) the Services Agreement pursuant to clause 11.1 of the Services Agreement.

 

  (k) An opinion from each Appraiser as to the market value of the Rig (taking into account the discounted value of all payments of Charter Rate) such that the average of the three market valuations provided by the Appraisers evidences that the Loan is equal to or less than eighty per cent. (80%) of the value of the Rig.

 

8 Fees

On the Completion Date, confirmation from the Agents that (a) all fees due to the Arranger or the Agents payable on or during the period up to the Completion Date for the Final Advance and (b) any Commitment Fee due and payable for the period up to the Commitment Fee Date which immediately precedes that date have been paid in full or, as the case may be, that arrangements satisfactory to the Agents for the payment of such fees have been put in place.

 

9 Representation and warranties

A certificate from each of the parties referred to in paragraph 1 of Part 1 of this Schedule 3 confirming that each of the Repeating Representations on the part of or, as the case may be, Continuing Representations relating to, each such party under any Security Document are true and accurate on the Completion Date is and will be true as if given on each such date by reference to the facts and circumstances then existing.

 

10 No Defaults

A certificate from each Security Party confirming that no Default (other than a Default constituted by any non-compliance with the Financial Covenants) has occurred and is continuing or would result from the Completion Date occurring.

 

11 Technical Adviser

Receipt by the Agents of the Yard Acceptance Confirmation.

 

12 Minimum Debt Service Reserve Account

Evidence satisfactory to the Agents that the Sponsor is in compliance with its obligations under clause 9.1 of the Deed of Undertaking.

 

117

Schedule 4

Form of Transfer Certificate

(referred to in clause 15.3)

[Lenders are advised not to employ Transfer Certificates without first ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services Xxx 0000 and regulations made thereunder.]

 

  To: [Name of Facility Agent]

[                    ]        

Transfer Certificate

This Transfer Certificate relates to the Project Loan Agreement dated 13 February 2008 between, among others, Olinda Star Ltd. as borrower and ING Bank N.V., as facility agent (the “Agreement”). Words and expressions defined in the Agreement shall have the same meanings in this Transfer Certificate.

 

1 [Name of Existing Lender] (the “Existing Lender”) confirms the accuracy of the summary of its Commitment and its Contribution set out in the schedule to this Transfer Certificate.

 

2 Each of the Existing Lender and [Name of Transferee] (the “Transferee”) requests the Facility Agent (on behalf of itself, the Borrower, the Security Parties, the Lenders and the other parties to the Agreement and the Deed of Proceeds and Priorities) to accept this Transfer Certificate as being delivered to the Facility Agent pursuant to and for the purposes of clause 15.3 of the Agreement and clause 15.2 of the Deed of Proceeds and Priorities, so as to take effect in accordance with its terms on [    ] [to be not less than five (5) Banking Days after delivery to the Facility Agent] (the “Effective Date”).

 

3 With effect from the Effective Date, the Existing Lender transfers to the Transferee absolutely all rights, interests and obligations (present and future, actual and contingent) which the Existing Lender has as a Lender under or by virtue of the Agreement and each of the other Facility Documents to which it is a party in relation to the portion of its Commitment and the portion of its Contribution respectively specified in the schedule to this Transfer Certificate and, by virtue of this Transfer Certificate and clause 15.3 of the Agreement, the Transferor is discharged entirely from the portion of its Commitment specified in the schedule to this Transfer Certificate.

 

4 The Transferee confirms that:

 

  (a) it has received a copy of the Agreement and each of the other Facility Documents and all other documentation and information required by it in connection with the transactions contemplated by this Transfer Certificate;

 

  (b) it has made and will continue to make its own assessment of the legality, validity, effectiveness, adequacy and enforceability of the Agreement, the other Facility Documents and this Transfer Certificate and has not relied and will not rely on any of the Existing Lender, the Arranger, the Facility Agent and the Security Trustee or on any statements made by any of them in that respect;

 

  (c) it has made and will continue to make its own assessment of the financial condition of the Security Parties and of the application of any relevant Basel 2 Regulation to the transactions contemplated by the Transaction Documents, and it has not relied and will not rely on any of the Existing Lender, the Arranger, the Facility Agent and the Security Trustee or on any statements made by any of them in relation to any of those matters; and

 

118

  (d) accordingly, none of the Existing Lender, the Arranger, the Facility Agent and the Security Trustee shall have any liability or responsibility to the Transferee in respect of any of the foregoing matters.

 

5 The execution of this Transfer Certificate by the Transferee constitutes its representation and warranty to the Existing Lender and each of the other parties to the Agreement and the Deed of Proceeds and Priorities that it has power to become a party to the Agreement and the Deed of Proceeds and Priorities as a Lender on the terms herein and therein set out and has taken all necessary steps to authorise the execution and delivery of this Transfer Certificate.

 

6 The Existing Lender makes no representation or warranty and assumes no responsibility or liability with respect to the legality, validity, effectiveness, adequacy or enforceability of any of the Agreement, the other Facility Documents and this Transfer Certificate and assumes no responsibility or liability for the financial condition of the Security Parties or any of them or for the performance by any Security Party of its obligations under the Facility Documents and any and all such representations and warranties, whether express or implied by law or otherwise, are hereby excluded and waived by the Transferee.

 

7 The Transferee hereby covenants to each of the Existing Lender, the Security Parties and the Facility Agent and each of the other parties to the Agreement and the Deed of Proceeds and Priorities that it will perform in accordance with their terms all obligations which by the respective terms of the Agreement, the Deed of Proceeds and Priorities and this Transfer Certificate will be assumed by it after acceptance (by countersignature) of this Transfer Certificate by the Facility Agent and, if not already a Lender, appoints the Facility Agent to act as its facility agent and the Security Trustee to act as its security trustee as provided in, and in accordance with the provisions of, the Agreement and the Deed of Proceeds and Priorities respectively and agrees to be bound by the terms of each of the Agreement and the Deed of Proceeds and Priorities.

 

8 The Transferee acknowledges that the Existing Lender has no obligation to repurchase or reacquire all or any of the rights, interests and obligations transferred by virtue of this Transfer Certificate or to indemnify or compensate the Transferee for any losses suffered by the Transferee as a consequence of the transfer effected by virtue of this Transfer Certificate or by reason of the application of any Basel 2 Regulation to the transactions contemplated by the Transaction Documents or otherwise.

 

9 The Existing Lender:

 

  (a) warrants to the Transferee and each of the other parties to the Agreement and the Deed of Proceeds and Priorities that it has taken all necessary steps to authorise the execution and delivery of this Transfer Certificate;

 

  (b) warrants to the Transferee that this Transfer Certificate is binding on the Existing Lender under the laws (i) of England and Wales, (ii) under which the Existing Lender is incorporated, and (iii) of the jurisdiction in which its lending office is located; and

 

  (c) agrees that it will, at its own expense, execute all and any documents which the Transferee reasonably requests in order to perfect in any Relevant Jurisdiction the Transferee’s title by virtue of this Transfer Certificate or for a similar purpose.

 

10 By the execution of this Transfer Certificate on their behalf by the Facility Agent and in reliance upon the representations and warranties of the Transferee, the Security Parties, the Facility Agent, the Security Trustee, the Lenders and each of the other parties to the Agreement and the Deed of Proceeds and Priorities:

 

  (a) accept the Transferee as a party (as a Lender) to the Agreement and the Deed of Proceeds and Priorities with respect to all rights, interests and obligations which by the terms of the Agreement, the Deed of Proceeds and Priorities and this Transfer Certificate will be assumed by the Transferee (including, without limitation, those provisions in relation to pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Facility Agent and the Security Trustee) after acceptance (by countersignature) of this Transfer Certificate by the Facility Agent; and

 

119

  (b) expressly agree that all Encumbrances securing the obligations of any Security Party and the obligations and liabilities of the Security Parties under the Facility Documents, are each hereby fully preserved and extended and shall continue in full force and effect notwithstanding this Transfer Certificate and the transfer hereby contemplated.

 

11 The representations, warranties, confirmations, agreements and covenants of the Transferee in this Transfer Certificate are given to, and for the benefit of, each of the other parties to the Agreement, the Deed of Proceeds and Priorities and the other Facility Documents.

 

12 This Transfer Certificate is governed by and shall be construed in accordance with the laws of England and Wales.

Note: This Transfer Certificate is not a security, bond, note, debenture, investment or similar instrument. The execution of this Transfer Certificate alone may not transfer a proportionate share of the Existing Lender’s interest in the security constituted by the Facility Documents in the Existing Lender’s or the Transferee’s jurisdiction. It is the responsibility of each individual Lender to ascertain whether any other documents are required to perfect a transfer of such a share in the Existing Lender’s interest in such security in any such jurisdiction and, if so, to seek appropriate advice and arrange for execution of the same.

IN WITNESS WHEREOF this Transfer Certificate has been executed as a Deed and delivered by the parties hereto on the date appearing below.

 

120

The Schedule

 

Dollar Amount of
Contribution

   

Next Interest
Payment Date(s)

   

Portion novated

($)         ($)
     
     
     

 

Dollar Amount of

Commitment

   

Next Interest
Payment Date(s)

   

Portion novated

($)         ($)
     
     
     

Administrative Details of Transferee

 

Lending office:   
Account for payments:   
Telephone:   
Facsimile:   
[Telex:]   
Attention:   
[Existing Lender]    [Transferee]
By:    By:
Date:    Date:
The Facility Agent   
By:   
[The Security Trustee   
By:                     ]   

on its own behalf

and on behalf of the Borrower, the other Security Parties, the other parties to the Agreement and the

Deed of Proceeds and Priorities

Date:

 

121

Schedule 5

Description of the Rig

 

Name

  

Olinda Star

Type   Mobile Offshore Drilling Unit
Port of Registration   Monrovia, Liberia
Gross Tonnage   12,727 tons
Net Tonnage   3,818 tons
Year of Building   1982
Year of Conversion   2008
Designer Modifications/Upgrade   Projemar, Brazil
Original Builder   UIE-CFEM Consortium
Conversion Yard 2008   MAUA Jurong, Brazil
Length overall   92.00 meters
Breadth moulded   69.00 meters
Depth moulded   33.20 meters
Draft Moulded   Operational max 21.6m
Call Sign   ELDC4
Official Number   7441
Classification Society   Bureau Veritas
Class   Offshore Semi-Submersible Drilling Unit with Unrestricted Navigation, (endorsed as “laid up” until the Date of Yard Acceptance)

 

122

Schedule 6

Schedule of Minimum Repayment Amounts

 

     Minimum  Repayment
Amount
($)		  

1

      10,983,303   

2

      11,174,138   

3

      11,368,289   

4

      11,565,813   

5

      11,766,769   

6

      11,971,216   

7

      12,179,216   

8

      12,390,830   

9

      12,606,121   

10

      12,825,152   

11

      13,047,989   

12

      13,274,698   

13

      13,505,346   

14

      13,470,001   

15

      13,978,734   

16

      14,221,614   

17

      14,468,715   

18

      14,720,109   

19

      14,975,871   

20

      15,236,076   

 

123

Schedule 7

Project Documents containing the Guarantee Rights and the Rig Rights

 

1 The Construction Xxxxxxxx

 

0 Xxxxxxxx Xx. Xxxxxx-XX0000 (Riser System) dated 1 October 2006 between Star Drilling and Xxxx Kvaerner Subsea, as amended by Amendment No. 1 dated 1 December 2006 and assigned pursuant to an agreement entered into or to be entered into between Star Drilling, Xxxx Kvaerner Subsea and the Borrower;

 

3 Contract No. Olinda-IC2013 (Blow Out Preventer and Mux Control Package) dated 20 October 2006 between Star Drilling and Hydril Company LP as amended by Amendment No.1 dated 20 October 2007 and Amendment No. 2 dated 20 October 2007 and assigned pursuant an agreement entered into or to be entered into between Star Drilling, Hydril Company LP and the Borrower;

 

4 The Design & Supply Contract for Riser Tensioners System Package and Motion Compensator System Package dated 8 December 2006 between Star Drilling and Control Flow Inc. and assigned pursuant an agreement entered into or to be entered into between Star Drilling, Control Flow Inc. and the Borrower;

 

0 Xxxxxxxx Xx Xxxxxx - XX0000 (Design and Supply Contract for Drilling Equipment and Electrical Systems) dated 27 October, 2006 between Star Drilling and XxXxxxxxxx Xxxxx Xxxxxxxx Company Incorporated and assigned pursuant an agreement entered into or to be entered into between Star Drilling, XxXxxxxxxx Xxxxx Xxxxxxxx Company Incorporated and the Borrower;

 

6 Contract No Olinda IC2016 (Design and Supply Contract for Handling Equipment) dated 27 October, 2006 between Star Drilling and Patriot Mechanical Handling Inc. as amended by Amendment No 1 dated 2 August 2007 and assigned pursuant an agreement entered into or to be entered into between Star Drilling, Patriot Mechanical Handling Inc. and the Borrower; and

 

7 Contract No. Olinda-IC2032 (Design and Supply Contract for Mooring Winches Equipment) dated 29 April 2007 between the Borrower and B.V. Machine - en Lierenfabriek X.X. Xxxxxxx.

 

124

Schedule 8

Mandatory Costs Formula

 

1 The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank which in either case, are introduced or published after the date of this Agreement.

 

2 On, or as soon as possible after, the first day of each Interest Period, the Facility Agent shall calculate as a percentage rate the additional cost rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Facility Agent as a weighted average of the Additional Cost Rates of all the affected Lenders (weighted in proportion to the percentage participation of each Lender in the Facility) and will be expressed as a percentage rate per annum.

 

3 The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Facility Agent as its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all facilities made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office. If a Lender fails to notify any Additional Cost Rate pursuant to this paragraph 3, the Facility Agent shall be entitled to assume that no such Additional Cost Rate has been incurred.

 

4 The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Facility Agent in accordance with the following formula:

 

E x 0.01

   per cent.
300   per annum

The resulting figures will be rounded to four decimal places.

Where:

 

  E. is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Facility Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Facility Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

 

5 For the purposes of this Schedule:

 

(a) “Fees Rules” means the rules on periodic fees contained in the Supervision Manual of the Financial Services Authority’s Handbook of rules and guidance or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

 

(b) “Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

 

(c) “Tariff Base” has the meaning give to it in, and will be calculated in accordance with, the Fees Rules.

 

6 If requested by the Facility Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Facility Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

 

125

7 Each Lender shall supply any information required by the Facility Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

 

(a) the jurisdiction of its Facility Office; and

 

(b) any other information that the Facility Agent may reasonably request for such purpose.

 

8 Each Lender shall promptly notify the Facility Agent of any change to the information provided by it pursuant to paragraph 7 above.

 

9 The rates of charge of each Reference Bank for the purpose of E above shall be determined by the Facility Agent based upon the information supplied to it pursuant to paragraphs 6, 7 and 8 above and on the assumption that, unless a Lender notifies the Facility Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits are the same as those of a typical bank from its jurisdiction of incorporation with a facility office in the same jurisdiction as its Facility Office.

 

10 The Facility Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 6, 7, and 8 above is true and correct in all respects.

 

11 The Facility Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 6, 7 and 8 above.

 

12 Any determination by the Facility Agent pursuant to this schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.

The Facility Agent may from time to time, after consultation with the Borrower and the Lenders, determine and notify to all Parties any amendments which are required to be made to this schedule to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination will, in the absence of manifest error, be conclusive and binding on all Parties.

 

126

Schedule 9

Group Structure Chart

 

LOGO

 

127

Schedule 10

Project Expenditure Certificate

 

To: [Name and address of Facility Agent]

[                    ]

I, [                    ], being the [President] [Project Manager] [Project Services Manager] [Vice President, Finance and Administration] [Junior Treasurer] [Controller] of Olinda Star Ltd.

 

1 Project Cost incurred to date (a) is in aggregate $[        ]; and (b) which has not previously been included in any Project Expenditure Certificate is $[        ].

 

2 Attached are invoices or other documentation in respect of such of the Project Cost referred to in paragraph 1(b) above which evidence that the amounts referred to therein either have been paid or are, at the date of this Certificate, due and payable.

 

3 Attached is an updated Budget for the Project.

 

4 Attached is a reconciliation of all receipts and withdrawals made to and from the Project Account against the Project Cost referred to in paragraph 1.

 

5 The information set out in this Certificate and the invoices or other documentation attached hereto are, to the best of my knowledge and belief, true and accurate.

Words and expressions defined in the Project Loan Agreement dated 13 February 2008 between, among others, Olinda Star Ltd. as borrower and ING Bank N.V. as facility agent shall bear the same meanings when used herein.

This Certificate is governed by and shall be construed in accordance with the laws of England and Wales.

 

 

 

  
 

for and on behalf of

Olinda Star Ltd.

  

 

128

Schedule 11

Pro Forma Budget

OLINDA STAR RIG

Date

 

All Amounts in million of US$

   Contracts signed   Initial Budget     Last Budget     Current
Budget		     Cost Overrun     Contracted
Delivery Date		   Anticipated
Completion Date

MAUA-JURONG Shipyard

              

Shipyard (area rental,engin.,etc..)

              

Driliing System

              

Marine System

              

Sub-Sea System

              

Power Generation / Electrical System

              

Downhole Tools / Well Test Equipments

              

Electrical System

              

Accommodations

              

Spare Parts

              

Transportation & Tests

              

Insurances

              

Others

              

Supervision & Training

              

Total

       —          —          —          0.0       

 

* Anticipated start up date of operations

 

129

Received Liquidated Damages Payments

     Mobilisation Fee     Construction Interest drawn under Facility    

Paid Charter Compensation

     Mobilisation Cost     Construction Interest incurred on Project     TO BE
UPDATED
EACH TIME

(Shortfall) Liquidated Damages / Charter Compensation

     0      (Shortfall)
Mobilization Fee		     0      (Shortfall) Construction Interest     0     

Cost Overrun

     0          0          0     
         

 

 

    
        Total Cost Overrun     0.0     
         

 

 

    

 

Initial Milesstone Payments Schedule   Total Project     MAUA-JURONG
Shipyard		     Shipyard (area
rental, engin., etc…)		     Driliing
System		     Marine System     Sub-Sea
System		     Power
Generation /
Electrical
System		  

3rd Quarter 2007

              

4th Quarter 2007

              

1st Quarter 2008

              

2nd Quarter 2008

              

3rd Quarter 2008

              

4th Quarter 2008

              
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL

     0.00        0.00        0.00        0.00        0.00        0.00        0.00   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Initial Milesstone Payments Schedule   Downhole Tools / Well Test Equipments     Electrical System     Accommodations     Spare Parts     Transportation &
Tests		     Insurances     Others     Supervision
& Training		  

3rd Quarter 2007

                

4th Quarter 2007

                

1st Quarter 2008

                

2nd Quarter 2008

                

3rd Quarter 2008

                

4th Quarter 2008

                
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL

     0.00        0.00        0.00        0.00        0.00        0.00        0.00        0.00   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

130

Current Milesstone Payments Schedule    Total Project      MAUA-JURONG
Shipyard		      Shipyard (area
rental, engin., etc…)		      Driliing
System		      Marine System      Sub-Sea
System		      Power
Generation /
Electrical
System		  

3rd Quarter 2007

                     

4th Quarter 2007

                     

1st Quarter 2008

                     

2nd Quarter 2008

                     

3rd Quarter 2008

                     

4th Quarter 2008

                     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL

      0.00         0.00         0.00         0.00         0.00         0.00         0.00   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Current Milesstone Payments
Schedule		   Downhole Tools / Well Test Equipments     Electrical System     Accommodations     Spare Parts     Transportation &
Tests		     Insurances     Others     Supervision
& Training

3rd Quarter 2007

                

4th Quarter 2007

                

1st Quarter 2008

                

2nd Quarter 2008

                

3rd Quarter 2008

                

4th Quarter 2008

                
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

TOTAL

     0.00        0.00        0.00        0.00        0.00        0.00        0.00     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

131

Schedule 12

Form of Pre-Completion Guarantee Supplement

 

  Dated    0000      
 

 

      

 

  XXXXXXX XXXXXX ÓLEO E GÁS S.A.    (1)   
  CONSTELLATION OVERSEAS LTD.    (2)   
  as Guarantors      
  and      
  ING BANK N.V.      
  as Security Trustee    (3)   
  and      
  ING BANK N.V.      
  as Facility Agent    (4)   

 

 

PRE-COMPLETION GUARANTEE

SUPPLEMENT

in relation to a Project Loan Agreement

of up to US$310,000,000 relating to one

semi-submersible drilling rig

 

 

 

LOGO

 

132

Contents

 

Clause    Page  

1

  

Definition and interpretation

      134   

2

  

Conditions

      135   

3

  

Representations and warranties

      135   

4

  

Amendment

      137   

5

  

Miscellaneous

      137   

6

  

Law and jurisdiction

      137   

 

133

THIS DEED is dated                     , 2008 and made BETWEEN:

 

(1)   QUEIROZ GALVÃO ÓLEO E GÁS S.A. a company incorporated under the laws of Brazil, registered under the Tax Roll number 30.521.090/001-27 and its registered office at Avenue Presidente Xxxxxxx Xxxxxx, 51-7th Floor, Rio de Janeiro, RJ, CEP. 00000-000, Xxxxxx (the “Sponsor”); and

 

(2)   CONSTELLATION OVERSEAS LTD., a company incorporated under the laws of the British Virgin Islands, with company number 1020641 and its registered office at Xxxxxxxxxx Plaza, Wickhams Cay I, 2nd Floor, Road Town, Tortola, British Virgin Islands (“Constellation”),

jointly and severally (together the “Guarantors” and each a “Guarantor”); in favour of

 

(3)   ING BANK N.V., a banking entity incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, in its capacity as security trustee for and on behalf of itself and the other Beneficiaries (the “Security Trustee”); and

 

(4)   ING BANK N.V., a banking institution incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Xxxxxxxxxxxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx in its capacity as facility agent (the “Facility Agent”).

WHEREAS:

 

(A)   By the Project Loan Agreement, the Lenders have agreed to make the Facility available to the Borrower to be used for the purposes of financing part of the Total Costs and to meet certain interest and commitment fee expenses.

 

(B)   By a pre-completion guarantee dated [                    ] 2008 and made between the parties hereto (the “Pre-Completion Guarantee”), the Guarantors have provided certain guarantees in relation to the Facility.

 

(C)   For the purposes of clause 3.2.3(a)(iii) of the Project Loan Agreement, the parties hereto wish to supplement, and amend certain provisions of, the Pre-Completion Guarantee as set out herein.

NOW IT IS HEREBY AGREED as follows:

 

1   Definition and interpretation

 

1.1   Defined expressions

In this Deed, unless the context otherwise requires, words and expressions defined in the Pre-Completion Guarantee or in the Project Loan Agreement (as defined in the Pre-Completion Guarantee) shall have the same meaning where used in this Deed, and:

“Effective Time” means the time at which each of the conditions referred to in clause 2 have been satisfied in full or waived by the Facility Agent (acting on the instructions of the Majority Banks), as notified by the Facility Agent to the Guarantors in writing.

 

1.2   Headings, interpretation and the Facility Agent

Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed and the provisions of clause 1.4 of the Project Loan Agreement and clause 1.5 of the Pre-Completion Guarantee shall apply (mutatis mutandis) in this Deed as if each reference therein to “this Agreement” were a reference to this Deed.

 

134

2   Conditions

The conditions to the Effective Time are as follows:

 

2.1   no Default shall have occurred and be continuing or would result from the amendment to be effected pursuant to this Deed; and

 

2.2   the Facility Agent, or its duly authorised representative, shall have received the documents and evidence specified in Schedule 1 in form and substance satisfactory to the Facility Agent.

 

3   Representations and warranties

Each of the Guarantors represents and warrants to each of the Beneficiaries, as at the date hereof and as at the Effective Time, that:

 

3.1   Status

 

3.1.1   it is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation; and

 

3.1.2   it has the power to own its assets and carry on its business as it is being conducted.

 

3.2   Binding obligations

subject to the Legal Reservations, the obligations expressed to be assumed by it in this Deed are legal, valid, binding and enforceable obligations.

 

3.3   Non-conflict with other obligations

the entry into and performance by it of, and the transactions contemplated by, this Deed do not and will not conflict with:

 

3.3.1   any law or regulation applicable to it;

 

3.3.2   its constitutional documents; or

 

3.3.3   any agreement or instrument binding upon its assets or constitute a default or termination event (however described) under any such agreement or instrument.

 

3.4   Power and authority

 

3.4.1   it has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, this Deed and the transactions contemplated by this Deed; and

 

3.4.2   no limit on its powers will be exceeded as a result of the giving of guarantees or indemnities contemplated by the Pre-Completion Guarantee as amended by this Deed.

 

3.5   Validity and admissibility in evidence

all Authorisations required or desirable:

 

  (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in this Deed; and

 

  (b) to make this Deed admissible in evidence in its Relevant Jurisdictions,

have been obtained or effected and are in full force and effect.

 

135

3.6   Governing law and enforcement

subject to any applicable Legal Reservations,

 

3.6.1   the choice of governing law of this Deed will be recognised and enforced in its Relevant Jurisdictions; and

 

3.6.2   any judgment obtained in relation to this Deed in the jurisdiction of the governing law of this Deed will be recognised and enforced in its Relevant Jurisdictions.

 

3.7   Insolvency

no:

 

3.7.1   corporate action, legal proceeding or other procedure or step described in clause 11.1.8 (Insolvency) of the Project Loan Agreement; or

 

3.7.2   legal process described in clause 11.1.7 (Legal process) of the Project Loan Agreement,

has been taken or, to its knowledge, threatened against it.

 

3.8   No filing or stamp taxes

under the laws of its Relevant Jurisdictions it is not necessary that this Deed be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to this Deed or the transactions contemplated by it except such filings as may be referred to in the legal opinions referred to in paragraph 4 of Schedule 1 and notified by the Facility Agent to that Guarantor, which filings, to the extent that the making of the same is within the power of that Guarantor, will be made promptly after the date of this Deed.

 

3.9   No Default

 

3.9.1   no Event of Default and no Default is continuing or is reasonably likely to result from the entry into, the performance of, or any transaction contemplated by, this Deed.

 

3.10   No adverse consequences

 

3.10.1   it is not necessary under the laws of its Relevant Jurisdictions:

 

  (a) in order to enable any Beneficiary to enforce its rights under this Deed; or

 

  (b) by reason of the execution of this Deed or the performance by it of its obligations under this Deed,

that any Beneficiary should be licensed, qualified or otherwise entitled to carry on business in any of such Relevant Jurisdictions; and

 

3.10.2   no Beneficiary is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of this Deed.

 

3.11   No immunity

neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding in any of its Relevant Jurisdictions (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).

 

136

4   Amendment

As of and with effect from the Effective Time, clause 2.14 of the Pre-Completion Guarantee shall be amended to read as follows:

“2.14 Limitation on Liability

The maximum aggregate liability of the Guarantors at any time under clause 2.1 of this Guarantee shall be limited to the amount which is the sum of:

 

  (a) fifty per cent. (50%) of the amount of the Loan as at the date on which the Loan is accelerated pursuant to clause 11.3 of the Project Loan Agreement and disregarding for this purpose any application made or to be made pursuant to clauses 5, 6, 7, 8 and/or 9 of the Deed of Proceeds and Priorities on or about that acceleration date; plus

 

  (b) [                    ] Dollars ($[        ]).”

[Note: The amount to be included in paragraph (b) above shall be the amount which, when aggregated with eighty per cent. (80%) of the Hull Value, equals the amount of the First Intercompany Hull Advance.]

 

5   Miscellaneous

The provisions of clauses 5, 6 and 7.3 of the Pre-Completion Guarantee shall apply (mutatis mutandis) in this Deed as if each reference therein to “this Guarantee” were a reference to this Deed.

 

6   Law and jurisdiction

 

6.1   Law

This Deed is governed by, and shall be construed in accordance with, the laws of England and Wales.

 

6.2   Jurisdiction

The provisions of clause 7.2 of the Pre-Completion Guarantee shall apply (mutatis mutandis) in this Deed as if each reference therein to “this Guarantee” were a reference to this Deed.

IN WITNESS WHEREOF the parties hereto have caused this Deed to be duly executed the date and year first above written.

 

137

Schedule 1

Conditions precedent

 

1 Constitutive Documents and corporate authorities

In respect of each Guarantor:

 

  (a) a copy certified by a duly authorised officer of the relevant person to be a true, complete and up-to-date copy, of the Constitutive Documents (in the case of the Sponsor, with evidence of registration of the same with the Board of Trade and publication in accordance with Articles 135 and 142 of the Corporations Law of Brazil) of that person together with a certified extract from the commercial register or, as the case may be, a certificate of good standing in respect of that person;

 

  (b) a copy, certified by a duly authorised officer of the relevant person to be a true copy, and as being in full force and effect and not amended or rescinded, of resolutions of the board of directors or governors or managing partner (or of a committee of the board of directors or governors or managing partner) and/or the resolutions of the shareholders, if required of that person (in the case of the Sponsor, with evidence of registration of the same with the Board of Trade and publication in accordance with Articles 135 and 142 of the Corporations Law of Brazil):

 

  (i) approving the entering into by the relevant person of the transaction as constituted by the rights and obligations of the relevant person under this Deed;

 

  (ii) authorising the execution by that person of this Deed; and

 

  (iii) authorising an individual or individuals to sign and deliver on behalf of that person this Deed;

 

  (c) a copy certified by a duly authorised officer of that person to be a true copy, and as being in full force and effect and not revoked or withdrawn, of any power of attorney issued by that person pursuant to the said resolutions;

 

  (d) a certificate of incumbency; and

 

  (e) in the case of the Sponsor, a valid certificate issued by the court distributor with jurisdiction over the place of business of the Sponsor attesting the inexistence of bankruptcy and/or judicial recuperation claims filed by or against them.

 

2 Authorisations and approvals

 

  (a) Evidence satisfactory to the Facility Agent (in the form of a confirmatory certificate from each Guarantor) that all Authorisations necessary for any matter or thing contemplated by this Deed and for the legality, validity, enforceability, priority, admissibility in evidence and effectiveness hereof have been obtained or effected on an unconditional basis and remain in full force and effect (or, in the case of any necessary arrangements effecting any future Authorisations, registrations and filings, that arrangements which are satisfactory to the Facility Agent have been made for the effecting of the same within any applicable time limit);

 

  (b) Evidence satisfactory to the Facility Agent (in the form of a confirmatory certificate from each Guarantor) that any Authorisations which may be required for the due execution and performance by either Guarantor of this Deed have been obtained and are in full force and effect;

 

  (c) Evidence satisfactory to the Facility Agent that this Deed has been (i) translated into Portuguese by a sworn public translation, and (ii) registered with the competent Registry of Deeds and Documents; and

 

138

  (d) A certified copy of the Register of Charges of Constellation, stamped as filed at the Registry of Corporate Affairs in the British Virgin Islands, containing details of this Deed.

 

3 This Deed

An original counterpart of this Deed duly executed and delivered by the Guarantors.

 

4 Legal opinions

Legal opinions in form and content satisfactory to the Lenders from:

 

  (a) Xxxxxx and Xxxxxx, British Virgin Island counsel to the Lenders, in relation to, inter alia, Constellation;

 

  (b) Xxxxx and Rameh, Brazilian counsel to the Lenders, in relation to, inter alia, the Sponsor; and

 

  (c) Xxxxxx Xxxx, English counsel to the Lenders, in relation to, inter alia, this Deed.

 

5 Process agents

Evidence that each service of process agent appointed or required to be appointed under this Deed has accepted that appointment.

 

139

EXECUTION PAGE: PRE-COMPLETION GUARANTEE SUPPLEMENT

The Guarantors

 

EXECUTED as a DEED   )   
by   )   
its duly authorised attorney-in-fact   )   
for and on behalf of   )   
QUEIROZ GALVÃO ÓLEO E GÁS S.A.   )   
in the presence of:   )   

 

     Attorney-in-Fact

 

     
Witness:     
Name:     
Address:     
Occupation:     
EXECUTED as a DEED   )   
by   )   
its duly authorised attorney-in-fact   )   
for and on behalf of   )   
CONSTELLATION OVERSEAS LTD.   )   
in the presence of:   )   

 

     Attorney-in-Fact

 

     
Witness:     
Name:     
Address:     
Occupation:     
The Security Trustee     
EXECUTED as a DEED   )   
by   )   
its duly appointed attorney-in-fact   )   
for and on behalf of   )   
ING BANK N.V.   )   
in the presence of:   )   

 

     Attorney-in-Fact
Witness:     
Name:     
Address:     
Occupation:     

 

140

EXECUTION PAGE: PRE-COMPLETION GUARANTEE SUPPLEMENT

 

The Facility Agent     
EXECUTED as a DEED   )   
by   )   
its duly appointed attorney-in-fact   )   
for and on behalf of   )   
ING BANK N.V.   )   
in the presence of:   )   

 

     Attorney-in-Fact
Witness:     
Name:     
Address:     
Occupation:     

 

141

PROJECT LOAN AGREEMENT

 

Borrower        
EXECUTED as a DEED   )      
for and on behalf of   )      
OLINDA STAR LTD.   )      
by   )      
its duly authorised attorney-in-fact   )    /s/    Xxxxxx X. X. Xxxxx
in the presence of:   )       Attorney in Fact/Procurador
/s/ Xxxxxx xx Xxxxxxxx Xxxxxxxxx        
Arranger        
EXECUTED as a DEED   )      
for and on behalf of   )      
ING BANK N.V.   )      
by   )      
its duly authorised attorney-in-fact   )    /s/    Xxxxxxx X. Xxxxx
in the presence of:   )       Attorney in Fact/Procurador
/s/ Fabiana X. X. Xxxxx        
Facility Agent        
EXECUTED as a DEED   )      
for and on behalf of   )      
ING BANK N.V.   )      
by   )      
its duly authorised attorney-in-fact   )    /s/    Xxxxxxx X. Xxxxx
in the presence of:   )       Attorney in Fact/Procurador
/s/ Fabiana X. X. Xxxxx        
Security Trustee        
EXECUTED as a DEED   )      
for and on behalf of   )      
ING BANK N.V.   )      
by   )      
its duly authorised attorney-in-fact   )    /s/    Xxxxxxx X. Xxxxx
in the presence of:   )       Attorney in Fact/Procurador
/s/ Fabiana X. X. Xxxxx        
Lenders        
EXECUTED as a DEED   )      
for and on behalf of   )      
ING BANK N.V.   )      
by   )      
its duly authorised attorney-in-fact   )    /s/    Xxxxxxx X. Xxxxx
in the presence of:   )       Attorney in Fact/Procurador
/s/ Fabiana X. X. Xxxxx        

 

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Filed: January 7th, 2013
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