EXHIBIT 10.320
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CONSTRUCTION SUPERVISORY AGREEMENT
dated as of February 1, 2000
among
BTM Capital Corporation
as Owner
RBF Exploration Co.,
and
RBF Exploration II, Inc.,
as Construction Supervisor
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CONSTRUCTION SUPERVISORY AGREEMENT
This CONSTRUCTION SUPERVISORY AGREEMENT, dated as of February 1,
2000 (as amended, supplemented or otherwise modified from time to
time, this "Agreement") among BTM Capital Corporation, a Delaware
corporation, as owner ("Owner"), RBF Exploration Co., a Nevada
corporation ("RBFE") and RBF EXPLORATION II INC., a Nevada
corporation, as construction supervisor ("Construction Supervisor").
PRELIMINARY STATEMENT
A. RBFE contemporaneously with the execution hereof entered
into that certain Equipment Sale and Funding Agreement of even date
herewith (the "Sale and Funding Agreement") pursuant to which RBFE
conveyed certain property and equipment to the Owner and entered into
the Novation Agreement of even date herewith, by and between RBFE,
Hyundai Heavy Industries Co., Ltd. and Hyundai Corporation (each, a
"Builder"), and the Owner (as amended, supplemented or otherwise
modified from time to time with the consent of the Owner, Construction
Supervisor, Indenture Trustee and the Surety, the "Construction
Contract") with respect to the construction of a semi-submersible
drilling vessel as described in the specifications to the Construction
Contract (the "Drilling Rig").
B. RBFE and Shell Deepwater Development, Inc. ("SDDI"), have
entered into that certain Offshore Daywork Drilling Contract, with an
effective date of August 12, 1998 (as amended, supplemented or
otherwise modified from time to time with the consent of Construction
Supervisor, Indenture Trustee and the Surety, the "SDDI Contract").
C. Pursuant to the Sale and Funding Agreement, RBFE has agreed,
among other things, to make loans to the Owner to fund various funding
obligations under this Agreement and in relation thereto to the supply
of certain equipment specified in the Sale and Funding Agreement.
D. As RBFE or one of its affiliates is and will be a party to
the SDDI Contract, performance of which will require the use of the
Drilling Rig, RBFE and the Owner contemplate that on or before the
Commencement Date they will enter into arrangements with respect to
the Drilling Rig to ensure that RBFE or one of its affiliates can
perform the SDDI Contract in its existing, amended or novated form in
accordance with its terms.
E. RBFE and the Construction Supervisor are parties to a
certain Construction Supervisory Agreement, with effective date of
August 12, 1999 (the "Original CSA") which is to be replaced by this
Agreement;
F. Subject to the terms and conditions hereof, as required by
the Sale and Funding Agreement, Owner desires to appoint Construction
Supervisor as Owner's sole and exclusive agent to supervise the design
and construction of the Drilling Rig in accordance with the
Construction Contract, the acquisition and assembly of the equipment
to be used thereon, and the delivery of the Drilling Rig to SDDI in
accordance with the SDDI Contract, and Construction Supervisor desires
to accept such appointment.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Capitalized terms used but not
otherwise defined in this Agreement have the meanings set forth below:
"Advance Payment Refund Amount" - at any time, the aggregate of
all payments, advances or reimbursements theretofore made by or on
behalf of the Owner or Indenture Trustee on account of the Cost of the
Project to the Builders, any vendor of Owner's Supplies or any other
equipment, Construction Supervisor or any other person, under the
Construction Contract or any other contract or agreement with respect
to the provision of any goods or services or for other purposes
relating to the Project, including, without limitation, amounts
advanced or incurred pursuant to Section 6.3 hereof, as set forth in a
certificate of RBFE on behalf of the Owner (or the Indenture Trustee
as Owner's assignee), which certificate shall be conclusive and
binding upon Construction Supervisor.
"Affiliate" - has the meaning set forth in the Trust Indenture.
"Anticipated Delivery Date" - May 1, 2000.
"Business Day" - has the meaning set forth in the Trust
Indenture.
"Certificate of Requisition" - as defined in Section 3.2.
"Collection Account" - as defined in Section 4.1.
"Commencement Date" - the date and hour that the last of the
following conditions has been satisfied: (i) the full crew is aboard,
(ii) the Drilling Rig has cleared customs and other formalities as
contemplated by the SDDI Contract, (iii) SDDI has inspected and
accepted the Drilling Rig and the personnel to perform the Work, (iv)
the Drilling Rig and the full crew are in all respects ready to
commence and sustain continued drilling operations at the rated
specifications of Appendix A to the SDDI Contract during the term of
the SDDI Contract, and (v) the Drilling Rig has departed a mutually
agreed (by RBFE on behalf of the Owner and SDDI) U.S. Gulf of Mexico
port or location after loading SDDI's drilling equipment and materials
and is en route to SDDI's first drilling or well location under the
SDDI Contract (or would have departed in the event of SDDI's failure
to designate such location in a timely manner). Notwithstanding the
foregoing, however, SDDI may require or allow the Drilling Rig to
commence work at an earlier date in which case such earlier date shall
be the Commencement Date and any of the above requirements for the
Commencement Date which have not been met shall be deemed waived.
"Complete" or "Completion" - with respect to the Project, means
that (i) the Drilling Rig (a) has been completed and delivered to
Owner under the Construction Contract substantially in accordance with
the Specifications, (b) has been completed and equipped in all
material respects in accordance with the requirements of SDDI Contract
and the specifications set forth therein and is fully capable of
performing the Work in accordance with the requirements and
specifications of the SDDI Contract, (c) has been delivered to and
unconditionally accepted by SDDI under the SDDI Contract without
waiver of any material requirement of the SDDI Contract without the
consent of Indenture Trustee, and (d) is free and clear of liens
except as permitted by the Project Documents, and (ii) the
Commencement Date has occurred.
"Cost of the Project" - the total cost of design, construction,
equipping, testing and delivering the Drilling Rig including all costs
of any nature whatsoever relating thereto and causing acceptance of
the Drilling Rig by SDDI under and in accordance with the SDDI
Contract.
"Default" - any event or circumstance which with the giving of
notice, passage of time or both would constitute an Event of Default.
"Environmental Laws" - any and all Governmental Requirements
pertaining to health, safety or the environment or the regulation of
hazardous substances or pollutants in effect in any and all
jurisdictions in which RBFE or the Owner is conducting or at any time
has conducted business, or where any Property of Owner is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and
any other international, federal, local or state environmental
conservation or protection laws. The terms "oil" and "discharge"
shall have the meanings specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings
specified in CERCLA, except that "hazardous substance" shall also
include petroleum and any fraction thereof, and the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and (ii) to the extent the laws of the state in
which any Property of the Owner is located establish a meaning for
"oil," "discharge," "hazardous substance," "release," "solid waste" or
disposal" which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply.
"Event of Default" - as defined in Section 6.1.
"Excess Costs" - the full amount of the Cost of the Project in
excess of $315,000,000.
"Governmental Authority" - the country, the state, county, city
and political subdivisions in which any Person or such Person's
Property is located or which exercises jurisdiction over any such
Person or such Person's Property, and any court, agency department,
commission, board, body, bureau of instrumentality of any of them
including monetary authorities which exercises jurisdiction over any
such Person or such Person's Property. Unless otherwise specified,
all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over RBFE or any of its
Property or the Drilling Rig.
"Governmental Requirements" - any law, statute, code, ordinance,
order, determination, rule, regulation, publication, judgment, decree,
injunction, franchise, permit, registration, consent, approval,
certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without
limitation, Environmental Laws, energy regulations and occupational,
safety and health standards or controls, of any Governmental
Authority.
"Indemnified Parties" - Owner, RBFE, Indenture Trustee and any
other holder of any mortgage or security interest in the Drilling Rig,
any party providing financing to RBFE or Owner in connection with the
Project (including, without limitation, each Note Holder and all
Credit Support Parties, as defined in the Trust Indenture), the
Surety, any Affiliate of any of the foregoing and their respective
directors, officers, shareholders, partners, employees, attorneys,
agents and licensees and the successors and assigns of any of the
foregoing (individually an "Indemnified Party").
"Indenture Trustee" - the trustee under the Trust Indenture.
"Initial Acceptance" - with respect to the Drilling Rig, means
that (i) the Drilling Rig has been completed in accordance with the
Specifications and tendered to Owner under the Construction Contract,
(ii) all trials contemplated by the Construction Contract have been
completed, and (iii) RBFE has accepted the Drilling Rig on behalf of
the Owner under the Construction Contract.
"Initial Acceptance Date" - June 28, 2000.
"Liquidated Damages" - liquidated damages in the amount of
$65,767,852, which amount shall be payable in addition to, and not to
the exclusion of, the Advance Payment Refund Amount as set forth in
this Agreement.
"Note Holder" - has the meaning set forth in the Trust Indenture.
"Outside Date" - September 30, 2000 (unless the Indenture Trustee
is deemed to have consented to an extension of the Outside Date as
provided in the penultimate "Provided, However" paragraph of the
Performance Bond in which event the Outside Date shall be extended
accordingly).
"Owner Lien" - has the meaning set forth in the Trust Indenture.
"Owner's Supplies" - all of the items to be furnished by Owner
for the Drilling Rig as specified in the Specifications.
"Performance Bond" - as defined in Section 2.6.
"Person" - an individual, partnership, corporation, limited
liability company, trust, unincorporated association or organization,
government, governmental agency or governmental subdivision.
"Project" - the design, construction, equipping and testing of
the Drilling Rig and causing its delivery to and acceptance by SDDI,
all as contemplated by and in accordance with this Agreement, the
Construction Contract and the SDDI Contract.
"Property" - any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Project Documents" - has the meaning set forth in the Trust
Indenture.
"Specifications" - the specifications and other information set
forth in Exhibits 1 through 4, inclusive, of the Construction
Contract, as the same may be modified from time to time in accordance
with the terms of the Construction Contract and with the consent of
Construction Supervisor, Indenture Trustee and the Surety.
"Supplemental Indenture" - has the meaning set out in the
definition of Trust Indenture below.
"Surety" - collectively, the providers of the Performance Bond.
"Termination Date" - as defined in Section 4.2.
"Trust Indenture" - the Trust Indenture and Security Agreement
dated as of August 12, 1999, between RBF Exploration Co. and Chase
Bank of Texas, National Association, as amended by the Supplemental
Indenture and Amendment dated February 1, 2000 (the "Supplemental
Indenture") and as from time to time further amended, supplemented or
modified.
"Work" - the drilling, deepening, sidetracking, workover,
testing, completing and/or plugging and abandonment operations
required by SDDI on SDDI's well(s) or ▇▇▇▇▇ for others as designated
by SDDI, together with ancillary services such as soil survey boring,
environmental data collection, fishing and retrieval (both down-hole
and on the sea floor), other services and subsea activities required
by SDDI for which the Drilling Rig is fit, and the moving of the
Drilling Rig between locations.
ARTICLE II
AGENCY
SECTION 2.1. Appointment of Construction Supervisor. (a)
Pursuant to and subject to the terms and conditions set forth herein,
Owner hereby irrevocably designates and appoints Construction
Supervisor as its exclusive agent to design, construct, acquire, equip
and test the Drilling Rig in accordance with the terms, conditions and
requirements of the Construction Contract and the SDDI Contract and to
deliver the Drilling Rig to, and cause acceptance of the Drilling Rig
by, SDDI in accordance with the requirements of the SDDI Contract. In
connection with the foregoing, Owner expressly authorizes Construction
Supervisor, or any agent or contractor of Construction Supervisor, and
the Construction Supervisor agrees, to take all action necessary or
desirable for the performance and satisfaction of all of Construction
Supervisor's obligations hereunder.
(b) Subject to the terms and conditions of this Agreement,
Construction Supervisor shall have sole management and control over
the construction means, methods, sequences and procedures with respect
to the construction, maintenance and equipping of the Drilling Rig.
Upon delivery of the Drilling Rig pursuant to the Construction
Contract, the Construction Supervisor shall have full and exclusive
custody, possession, control and command of the Drilling Rig for
performance of this Agreement.
(c) Construction Supervisor shall undertake to the Owner and to
RBFE to perform the Project in accordance with the provisions of this
Agreement including, without limitation, the provisions of Section
2.5, and, subject to the provisions hereof, shall pay for the Cost of
the Project. Construction Supervisor shall make all commercially
reasonable efforts to cause the Project to be Complete on or before
the Anticipated Delivery Date and shall, in any event, cause the
Project to be Complete on or before the Outside Date. Construction
Supervisor shall pay for the Cost of the Project using (i) the
proceeds of advances under Article III hereof and (ii) its own funds
to the extent of all Excess Costs. Construction Supervisor shall be
solely responsible for payment of all Excess Costs. If, for any
reason, the proceeds of advances under Article III hereof are
insufficient to pay the entire Cost of the Project, Construction
Supervisor shall, nonetheless, be bound and required to fulfill its
obligations hereunder and pay the entire Cost of the Project, and,
under no circumstances, shall the insufficiency of the funds available
to Construction Supervisor reduce or release Construction Supervisor
from any of its obligations hereunder.
SECTION 2.2. Acceptance. Construction Supervisor hereby
unconditionally and irrevocably accepts the designation and
appointment as Owner's agent in accordance with the terms hereof. In
connection herewith, the Owner will only act as directed by RBFE and
any and all direction to the Construction Supervisor by the Owner
hereunder shall be through RBFE.
SECTION 2.3. Termination of Authority. Construction
Supervisor's authority under this Agreement shall terminate on the
earlier to occur of (i) Completion of the Project in accordance with
the terms and conditions of this Agreement and satisfaction of the
other terms and provisions hereof, or (ii) termination by Owner (with
the consent of RBFE) pursuant to Article VI hereof.
SECTION 2.4. Sub-Contracts and Delegation. Construction
Supervisor may execute any of its duties under this Agreement by or
through agents, contractors, employees or attorneys-in-fact, and
Construction Supervisor shall enter into such agreements in addition
to the Construction Contract that Construction Supervisor deems
necessary or desirable in connection with the Project and performance
of all of its other duties hereunder. No such delegation shall limit
or reduce in any way Construction Supervisor's duties and obligations
under this Agreement, and Construction Supervisor shall be and remain
fully liable and responsible therefor.
SECTION 2.5 Covenants of the Construction Supervisor. In
addition to, and without limitation of, the Construction Supervisor's
covenants elsewhere herein, the Construction Supervisor hereby
covenants and agrees that it will, at its own expense with no claim
for reimbursement thereof against Owner:
(a) monitor, supervise and approve in all respects the design,
construction, equipping and testing of the Drilling Rig and the
procurement, delivery and installation of all parts, materials,
equipment and supplies to be installed and/or otherwise used thereon,
including, without limitation, all Owner's Supplies (as defined in the
Construction Contract), all in accordance with the provisions of the
Construction Contract and the SDDI Contract and in connection
therewith to exercise all rights and perform all obligations of Owner
under the Construction Contract and the contractor under the SDDI
Contract in such manner to ensure that the Drilling Rig will be so
constructed, completed, delivered and accepted;
(b) approve or disapprove in a timely manner all plans and
drawings as Construction Supervisor shall deem to be in the best
interests of RBFE and the Owner and to comply with the SDDI Contract;
(c) attend tests and trials of the Drilling Rig and all major
items of Owner's Supplies;
(d) comply with all obligations of the "Owner" (as defined in
the Construction Contract) under the Construction Contract
in order to maintain the Construction Contract in full
force and effect so as to preserve fully the rights of the
"Owner" thereunder;
(e) agree to any amendment, modification or change in the
Construction Contract, the Specifications, Owner's Supplies and the
plans and specifications, as Construction Supervisor deems in its sole
discretion to be necessary for the completion of the Drilling Rig as
necessary for complete performance of the Project; provided, that (i)
no such amendment or modification shall result in a delay of
Completion beyond the Outside Date, (ii) the aggregate effect of any
amendment or modification, when taken together with any previous or
contemporaneous amendments or modifications, will not have a material
adverse effect on the soundness, structural integrity, classification,
value, utility, operation or useful life of the Drilling Rig and (iii)
no such amendment or modification shall increase Owner's liability
thereunder;
(f) appoint in the name of Owner any and all arbitrators
required or permitted to be appointed by Owner under the Construction
Contract and conduct any and all arbitrations required or permitted to
be conducted under or pursuant to the Construction Contract in
connection with any disputes arising thereunder;
(g) take all such other actions with respect to the Drilling
Rig or Construction Contract as Construction Supervisor shall deem to
be in the best interests of RBFE and the Owner;
(h) identify and assist with the acquisition of Owner's
Supplies in accordance with the terms and conditions of the
Construction Contract and the SDDI Contract;
(i) perform all engineering work and all design and supervisory
functions relating to the Project;
(j) negotiate and enter into all contracts or arrangements to
procure Owner's Supplies and services necessary to construct the
Drilling Rig on such terms and conditions as are customary and
reasonable in light of local standards and practices and prudent
industry practices;
(k) comply with and obtain all necessary licenses, permits,
authorizations and other rights (including, without limitation, the
issuance of a certificate of classification of the Drilling Rig by the
American Bureau of Shipping as a A1 M, "Column Stabilized Drilling
Unit", a CDS, P, a PAS, and accompanied by a statement of fact from
ABS for UK/Den/HSE compliance and Drilling System Compliance) required
under all applicable laws, rules and regulations from all governmental
authorities in connection with the development and construction of the
Drilling Rig in accordance with the Construction Contract and the
transportation thereof to the appropriate port in the U.S. Gulf of
Mexico and to otherwise comply with such laws, rules and regulations;
(l) maintain all books and records with respect to the
construction, transportation and delivery of the Drilling Rig;
(m) maintain the Drilling Rig in good first class condition and
working order and move the Drilling Rig to the appropriate port or
other location in the U.S. Gulf of Mexico and to cause the Drilling
Rig to be delivered to and accepted by SDDI and the Commencement Date
to occur under the SDDI Contract;
(n) cause construction of the Drilling Rig to be pursued
diligently and without undue interruption in accordance with the
Construction Contract and in compliance with all Governmental
Requirements;
(o) make all commercially reasonable efforts to cause the
Project to be Complete on or before the Anticipated Delivery Date and
shall, in any event, cause the Project to be Complete no later than
the Outside Date;
(p) enforce all of the obligations of the Builders under the
Construction Contract;
(q) (i) until delivery of the Drilling Rig to Owner under the
Construction Contract, maintain insurance on Owner's Supplies in
accordance with the requirements of the Construction Contract and the
Trust Indenture, and (ii) from and after delivery of the Drilling Rig
to Owner under the Construction Contract and through the date of
Completion, maintain or cause to be maintained insurance on the
Drilling Rig at all times in accordance with the requirements set
forth on Schedule A hereto;
(r) immediately upon acceptance of the Drilling Rig by Owner
under the Construction Contract, cause the Drilling Rig to be (i)
documented and registered in the name of Owner under the laws of the
Republic of Panama with no other filing, recordation or registration
of any other document or instrument necessary in order to establish
Owner's good and valid title thereto and (ii) covered by a mortgage in
favor of the Indenture Trustee which shall have been duly filed with
the Public Registry Office of the Republic of Panama and be a first
preferred ship mortgage under the laws of the Republic of Panama
effective as against creditors of and purchasers from Owner;
(s) provide all personnel required in order to perform
Construction Supervisor's obligations hereunder, including, without
limitation, those personnel necessary to move the Drilling Rig to a
port in the U.S. Gulf of Mexico, deliver the Drilling Rig to SDDI and
cause acceptance of the Drilling Rig by SDDI in accordance with the
SDDI Contract, such personnel to have the qualifications necessary to
comply with Construction Supervisor's obligations hereunder and any
qualifications imposed by applicable law, rules and regulations, and
such personnel to be made available at such locations and in such
numbers as may be required in order to comply with the foregoing;
(t) provide such administrative, engineering and other
technical support services as may be needed by the personnel provided
pursuant to the foregoing item (s) in order for Construction
Supervisor to perform its obligations hereunder, including, without
limitation, accounting, data processing, legal, tax, project
management, contract administration, transportation, communications,
payroll, purchasing, shipping and personnel administration services;
(u) provide such equipment, materials, spare parts, supplies
and related property as the personnel provided pursuant to the
foregoing item (s) and the personnel providing the services described
in the foregoing item (t) may require in order for Construction
Supervisor to perform its obligations hereunder, such equipment,
materials, spare parts, supplies and related property to be provided
as such locations and in such quantities as may be required to such
performance;
(v) perform all covenants and obligations of the Mortgagor
under the First Naval Mortgage delivered pursuant to
clause (r) above; and
(w) to the extent any of the foregoing requires the execution
of any documents by the Owner or that the Owner take any
action, the Construction Supervisor will timely so advise
the Owner and prepare any such documents for the Owner's
signature.
(x) perform or cause to be performed, at its sole cost and
expense, all obligations of the Issuer pursuant to Section
7.01 of the Supplemental Indenture.
(y) perform or cause to be performed, at its sole cost and
expense, all actions necessary to effect a sale of the
Drilling Rig pursuant to the provisions of clause 9 of the
Sale and Funding Agreement.
SECTION 2.6. Performance Bond. Construction Supervisor shall
obtain and maintain at its sole cost and expense in full force and
effect at all times a performance bond in the form attached hereto as
Exhibit A, naming Owner, and Indenture Trustee and their respective
successors and assigns as dual obligees (such bond, the "Performance
Bond").
SECTION 2.7. Casualty and Construction Period Event of Loss.
If at any time before Completion of the Project there occurs any loss
or damage to the Drilling Rig from fire or other casualty,
Construction Supervisor shall promptly cause such loss or damage to be
repaired and the Project to be completed in accordance with the terms
hereof and all appropriate insurance claims to be made in respect
thereof, so as to cause the Commencement Date to occur on or before
the Outside Date. Construction Supervisor shall notify Owner and RBFE
on behalf of the Owner of any such loss or damage that Construction
Supervisor reasonably believes will cost more than $1,000,000 to
repair or which gives rise to a claim of more than $1,000,000 under
the insurance policies then in effect with respect to the Drilling
Rig. The Construction Supervisor will take actions and directions
with respect to any such loss or damage and/or insurance coverage as
directed by RBFE and give prompt notice thereof to the Owner.
ARTICLE III
FUNDING OF CONSTRUCTION COSTS
SECTION 3.1. Funding of Construction Costs. Subject to the
terms and conditions of this Agreement, RBFE agrees to make loans to
the Owner pursuant to the Sale and Funding Agreement sufficient to pay
or reimburse or cause to be paid and reimbursed Construction
Supervisor for the Cost of the Project up to a maximum of
$315,000,000.
SECTION 3.2. Requisitions and Payments. (a) Subject to the
terms and conditions hereof and so long as there is no Default or
Event of Default continuing hereunder, RBFE on behalf of the Owner
pursuant to the Sale and Funding Agreement shall make or cause to be
made payments to Construction Supervisor or its order upon
Construction Supervisor's written request from time to time no more
frequently than monthly on account of the Cost of the Project. Each
such payment shall be made upon Construction Supervisor's delivery of
a requisition in the form attached to the Trust Indenture as Annex H
("Certificate of Requisition"), copies of which shall be provided to
Indenture Trustee and the Surety upon submission to RBFE on behalf of
the Owner. All payments will be made directly to the Builders, other
vendors of Owner's Supplies or other equipment or to any other party
on account of the Cost of the Project or as reimbursement to
Construction Supervisor only upon receipt of proper evidence that
Construction Supervisor has paid any such amount to Builders, such
other vendor or such other party.
(b) The aggregate of all payments by or on behalf of the Owner
made under this Agreement on account of the Cost of the Project shall
not exceed $315,000,000, and Construction Supervisor shall be solely
responsible for all Excess Costs.
(c) Nothing in this Article III or elsewhere in this Agreement
shall have the effect of limiting Construction Supervisor's
obligations hereunder or making such obligations conditional on the
availability of funds from Owner or RBFE. Construction Supervisor's
obligations hereunder with respect to the performance of the Project
and the payment therefor are absolute and unconditional, and
Construction Supervisor shall pay and perform its obligations
hereunder notwithstanding any breach or default by RBFE or the Owner
hereunder or any other circumstance whatsoever.
(d) Notwithstanding anything herein to the contrary, it is
understood and agreed that the Owner does not and shall not have any
funding or other obligations under this Agreement and no recourse
shall be had against the Owner or its assets for performance hereof
except as provided in Article 6 of the Supplemental Indenture. This
clause, however, shall not limit the obligation of the Owner set forth
in Section 8.8 of this Agreement.
ARTICLE IV
EXTRAORDINARY PAYMENTS; CONDITIONAL DEMAND
SECTION 4.1. Certain Periodic Payments. In the event that
Completion of the Project does not occur on or before the Anticipated
Delivery Date, then Construction Supervisor shall thereafter make
periodic payments to the Collection Account established pursuant to
the Trust Indenture which currently is account #55-03-001-▇▇▇▇▇▇▇ at
Chase Bank of Texas, N.A. (the "Collection Account") in the amount of
$150,000 for each day from and after the Anticipated Delivery Date
through the date specified in the following sentence to compensate the
parties for losses incurred in connection with such late delivery.
Construction Supervisor shall make such payments through the earliest
to occur of (i) the date of Completion, (ii) the Termination Date (as
defined in Section 4.2 if the rescission or termination contemplated
by Section 4.2 has occurred), and (iii) the date of payment in full of
the amounts required by Section 6.1 following a demand therefor by
reason of an Event of Default. Such payments shall be made from time
to time on demand by the Indenture Trustee, RBFE or the Owner and in
any event all such accrued and unpaid payments shall be made not less
than monthly on the last day of each month (or the next succeeding
Business Day, if such day is not a Business Day).
SECTION 4.2. Lump Sum Payment. In the event that (i) Owner
(or Construction Supervisor on behalf of Owner) rescinds the
Construction Contract pursuant to Article X thereof, or (ii) SDDI
terminates the SDDI Contract pursuant to section 2.2.1.2 thereof, then
in either case Construction Supervisor shall on the earliest to occur
of (a) the Outside Date, (b) within six months following the effective
date of the earlier to occur of such rescission or termination (the
earlier to occur of the date of such rescission or termination, the
"Termination Date"), or (c) if the conditional demand contemplated by
Section 4.3(a) has been made, the date on which payment would be due
pursuant to such demand, pay to the Collection Account the Advance
Payment Refund Amount together with the Liquidated Damages, for losses
incurred as a result of such rescission or termination. Construction
Supervisor shall also make periodic payments to the Collection Account
on demand in the amount of $150,000 for each day from and after the
Termination Date through the date of payment by Construction
Supervisor of the Advance Payment Refund Amount plus Liquidated
Damages, to compensate the parties for losses incurred in connection
with delay in such payment. Such payments shall be made from time to
time on demand by the Indenture Trustee, RBFE or the Owner and in any
event all such accrued and unpaid payments shall be made not less than
monthly on the last Business Day of each month.
SECTION 4.3. Conditional Demands. (a) In the event that
Initial Acceptance of the Drilling Rig does not occur on or before the
Anticipated Delivery Date and the rescission or termination
contemplated by Section 4.2 has not occurred, then the Indenture
Trustee, RBFE or RBFE on behalf of the Owner may make demand on
Construction Supervisor for payment of the amount required by Section
6.1. Such demand shall be upon the condition that if Initial
Acceptance of the Drilling Rig does occur on or before the Initial
Acceptance Date, then such demand is void. If Initial Acceptance of
the Drilling Rig does not occur on or before the Initial Acceptance
Date, then Construction Supervisor shall pay in full the amounts
required by Section 6.1 on or before the date specified in such demand
which date shall be no earlier than the later to occur of (i) Initial
Acceptance Date, or (ii) 50 days after the making of the demand
contemplated by this Section 4.3(a). The Indenture Trustee or RBFE
may provide a copy of the notice of such demand to the Surety.
(b) In the event that Completion of the Project does not occur
on or before July 31, 2000 and the rescission or termination
contemplated by Section 4.2 has not occurred, then the Indenture
Trustee, RBFE, or the Owner may make demand on Construction Supervisor
for payment of the amount required by Section 6.1. Such demand shall
be upon the condition that if Completion of the Project does occur on
or before the Outside Date, then such demand is void. If the
Completion of the Project does not occur on or before the Outside
Date, then Construction Supervisor shall pay in full the amounts
required by Section 6.1 on or before the date specified in such demand
which date shall be no earlier than the later to occur of (i) the
Outside Date, or (ii) 50 days after the making of the demand
contemplated by this Section 4.3(b). The Indenture Trustee or RBFE
may provide a copy of the notice of such demand to the Surety.
ARTICLE V
REPRESENTATION AND WARRANTIES
Construction Supervisor represents and warrants to Owner and RBFE
as follows:
SECTION 5.1 Organization and Power. Construction Supervisor (i)
is a corporation duly formed, validly existing and in good standing
under the laws of the State of Nevada and is duly qualified as a
foreign corporation and in good standing in all jurisdictions in which
such qualification is required in order for Construction Supervisor to
carry on its business as now conducted; and (ii) has the full
corporate power, authority and legal right to carry on its business as
now conducted and to execute, deliver and perform this Agreement.
SECTION 5.2 No Violation. Neither the execution, delivery or
performance by Construction Supervisor of this Agreement nor
compliance herewith (i) conflicts or will conflict with or results or
will result in a breach of or constitutes or will constitute a default
under (A) any law in effect as of the date hereof binding upon
Construction Supervisor or the Drilling Rig or (B) any order, writ,
injunction or decree of any court or other governmental authority
binding upon Construction Supervisor or the Drilling Rig, or (ii)
results or will result in the creation or imposition of any lien,
charge or encumbrance upon its property pursuant to such agreement or
instrument. Neither the execution, delivery or performance by the
Construction Supervisor of this Agreement nor compliance by
Construction Supervisor herewith conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under (i) the certificate of incorporation or by-
laws of Construction Supervisor or (ii) any agreement or instrument to
which Construction Supervisor is a party or by which it is bound.
SECTION 5.3 Agreement is Legal and Authorized. This Agreement
has been duly authorized by Construction Supervisor by all necessary
corporate action (including any necessary action by its shareholders)
and duly executed and delivered by it, and, assuming the due
authorization, execution and delivery thereof by Owner, is a legal,
valid and binding obligation of Construction Supervisor enforceable
against it in accordance with its terms, except as certain rights and
remedies as set forth herein may be limited by (a) bankruptcy,
reorganization and similar laws of general application relating to or
affecting the enforcement of creditors' rights and (b) general
principles of equity.
SECTION 5.4 Consents. No consent, license, approval or
authorization of, or filing, registration or declaration with, or
exemption or other action by, any governmental or public body,
authority, bureau or agency (including courts) under the laws of the
United States of America, the State of Delaware or of any other state
is required in connection with the execution and delivery or
performance by Construction Supervisor of this Agreement.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. Events of Default. If any one or more of the
following events (each an "Event of Default") shall occur:
(a) Construction Supervisor shall fail to make any payment
required by the terms of this Agreement, including, without
limitation, any payment required on account of Excess Costs or any
payment required pursuant to Article IV hereof and such failure shall
continue for two (2) Business Days;
(b) the Performance Bond shall be rescinded, terminated or
cease to be in full force and effect or either Surety shall assert,
claim or take the position that the Performance Bond is rescinded,
terminated or not in full force and effect or otherwise take any steps
to rescind or terminate the Performance Bond or cause it not to be in
full force and effect;
(c) Construction Supervisor shall fail to observe or perform
any term, covenant or condition (other than any covenant or condition
as to which provision is otherwise made in this Section 6.1) of this
Agreement and such failure shall remain uncured for a period of 30
days after the earlier of actual knowledge thereof by Construction
Supervisor or the giving of written notice thereof by Owner; provided,
however, no Event of Default shall be deemed to occur if such failure
or breach remains capable of cure and Construction Supervisor shall
have promptly commenced the cure of such failure or breach and
continues to act with diligence to cure such failure or breach and
such failure or breach is in fact cured no later than Completion of
the Project;
(d) any representation or warranty made by Construction
Supervisor in this Agreement (or in any certificate or instrument
executed in connection therewith) shall be untrue, inaccurate or
misleading in any material respect;
(e) Construction Supervisor shall generally fail to pay, or
admit in writing its inability to pay, its debts as they become due,
or shall voluntarily commence any case or proceeding or file any
petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a
receiver, agent, custodian, liquidator or similar person for itself or
a substantial portion of its property, assets or business or to effect
a plan or other arrangement with its creditors, or shall file any
answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition filed against it in any
bankruptcy, insolvency or similar case or proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the
appointment of, a receiver, agent, custodian, liquidator or similar
person for itself or a substantial portion of its property, assets or
business, or action shall be taken by Construction Supervisor for the
purpose of effectuating, authorizing or furthering any of the
foregoing;
(f) involuntary proceedings or an involuntary petition shall be
commenced or filed against Construction Supervisor under any
bankruptcy, insolvency or similar law or seeking the dissolution,
liquidation or reorganization of such person or the appointment of a
receiver, agent, custodian, liquidator or similar person for
Construction Supervisor or of a substantial part of its property,
assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of its property, assets or business, and such
proceedings or petition shall not be dismissed or stayed, or such
writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded, within 60 days after
commencement, filing or levy, as the case may be;
(g) any of the events set forth in the foregoing clauses (e)
and (f) shall occur with respect to either of Builders and such event
shall, in the reasonable judgement of RBFE or the Owner, materially
and adversely affect the ability of either Builder to perform its
obligations under the Construction Contract;
(h) a material default by Builder occurs and is continuing
under the Construction Contract and Construction Supervisor is not
diligently pursuing the cure thereof or RBFE or the Owner determines
in its reasonable discretion that such default is of a nature that it
cannot be cured for Completion on or before the Outside Date;
(i) Initial Acceptance of the Drilling Rig has not occurred on
or before June 28, 2000; or
(j) Completion of the Project has not occurred on or before the
Outside Date;
then in any such event, Owner may, in addition to the other rights and
remedies provided for in this Article immediately terminate the rights
of the Construction Supervisor under this Agreement by giving
Construction Supervisor written notice of such termination, and upon
the giving of such notice, this Agreement shall terminate as to the
rights of Construction Supervisor. The Owner may provide a copy of
such notice to the Surety. If the Indenture Trustee, RBFE or the
Owner has not made either of the conditional demands contemplated by
Section 4.3, the Indenture Trustee, RBFE or the Owner may demand in
such notice that Construction Supervisor pay to the Collection
Account, within thirty (30) days after the date of receipt of such
notice, all accrued and unpaid amounts due pursuant to Section 4.1 and
the second sentence of Section 4.2 and, to the extent not paid
pursuant to Section 4.2, and pay to the Collection Account an amount
equal to the Advance Payment Refund Amount together with the
Liquidated Damages. In the event that the Indenture Trustee, RBFE or
the Owner has made either of the conditional demands contemplated by
Section 4.3, Construction Supervisor shall pay the amounts described
in the preceding sentence on the date specified in such demand
consistent with Section 4.3.
SECTION 6.2. Additional Remedies. (a) If an Event of Default
shall have occurred and be continuing, Owner, RBFE and the Indenture
Trustee shall have all rights and remedies available at law, equity or
otherwise.
(b) No failure to exercise and no delay in exercising any
right, remedy, power or privilege under this Agreement shall operate
as a waiver thereof; nor shall any single or partial exercise of any
right, remedy or power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
SECTION 6.3. Owner's Right to Cure Event of Default. Owner or
RBFE, without waiving or releasing any obligation owed to it or any
Event of Default may (but shall be under no obligation to) remedy any
Event of Default for the account of and at the sole cost and expense
of Construction Supervisor. All funds advanced or out-of-pocket costs
and expenses incurred in connection with such remedy, together with
interest thereon at an annual rate of 12% from the date on which such
sums or expenses are paid by Owner or RBFE, shall be paid by
Construction Supervisor to the Owner or RBFE, as appropriate, on
demand.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. Construction Supervisor hereby assumes all
liability for its services to be performed hereunder and under the
Project Documents including payment of all fees for permits, studies
and variances, whether performed by Construction Supervisor, by any
contractor or subcontractor or any other entity performing the Project
directly or indirectly for or under Construction Supervisor or any
contractor or subcontractor.
SECTION 7.2. Construction Supervisor acknowledges that it is a
fundamental assumption of the Construction Supervisor and the
Indemnified Parties that the Indemnified Parties and all persons and
entities associated with the Indemnified Parties should not incur any
Claims or Losses (other than Claims and/or Losses to the extent caused
by the Fault of such Indemnified Party or, with respect to a BTM
Indemnitee (as defined below), other than with respect to Taxes, to
the extent consisting of the Owner's obligations under Section 4.05 of
the Supplemental Indenture), by reason of the execution and delivery
of the Transaction Documents (as defined in the Supplemental
Indenture) and its or their participation in the transactions
contemplated thereby (the Transaction Documents, the Project and the
transactions contemplated thereby, herein collectively referred to as
the "Transaction").
SECTION 7.3. Therefore, in order to assure the continuing
efficacy of the statements and fundamental assumptions described in
Section 7.1 and 7.2 above, in the face of the possibility of Claims or
Losses being imposed on, asserted against, or incurred by the
Indemnified Parties, the Construction Supervisor covenants that the
Construction Supervisor shall, on a Current Basis and an After-Tax
Basis, indemnify, protect, defend and hold harmless the Indemnified
Parties from, against and in respect of, any and all Claims and/or
Losses imposed on, incurred by or asserted against any Indemnified
Party in any way relating to, resulting from or arising out of or in
connection with, directly or indirectly, the Transaction (other than,
with respect to any particular Indemnified Party, Claims and/or Losses
to the extent caused by the Fault of such Indemnified Party and with
respect to the Owner and its successors and assigns under the
Supplemental Indenture (each a "BTM Indemnitee"), other than with
respect to Taxes, to the extent consisting of the Owner's obligations
under Section 4.05 of the Supplemental Indenture), whether caused by
or arising in connection with the failure of the Construction
Supervisor to fully perform its obligations under this Construction
Supervisory Agreement or caused by or arising in connection with any
other act, any failure to act, breach of any representations or
warranty, any event or any other circumstance whatsoever pertaining to
any person or entity, including, without limitation of the generality
of the foregoing, any of the following:
(a) any of the Transaction Documents (as defined in the
Supplemental Indenture) and any other instruments or
agreements entered into by any of the parties hereto in
connection with the Transaction, and any amendment,
supplement or modification of or to such Transaction
Documents, instruments or agreements, the enforcement by
any Indemnified Party of any of its rights under this
Construction Supervisory Agreement, such Transaction
Documents, instruments or agreements or any breach or
failure to perform or observe, or other noncompliance
with, any covenant or agreement or other obligation to be
performed by any party to such Transaction Documents,
instruments or agreements, or the incorrectness of any
representation or warranty of any such party;
(b) the Drilling Rig or any part or component thereof,
including without limitation, (a) the manufacture,
design, purchase, acceptance, nonacceptance or rejection,
ownership, idling, laying up, documentation,
redocumentation, registration, reregistration,
deregistration, financing, refinancing, delivery,
nondelivery, charter, subcharter, assignment, possession,
use or non-use, operation, loading or unloading,
maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage,
seaworthiness, replacement, repair, sale, substitution,
return, abandonment, redelivery or other disposition of
the Drilling Rig or any part or any component thereof
(including, in each case, latent or other defects,
whether or not discoverable) and any claim for patent,
trademark, or copyright infringement and all liabilities,
obligations, losses, damages and claims in any way
relating to or arising out of injury to persons,
properties or the environment (including, without
limitation, all Claims and Losses associated with
remediation, response, removal, corrective action, clean-
up, remedial action, treatment, compliance, restoration,
abatement, containment, monitoring, sampling,
investigation, the protection of wildlife and aquatic
life and vegetation, the interference with or
contamination of any wetland or body of water or aquifer,
an any relevant mitigative action under any Environmental
Law relating to the Drilling Rig and any Claims or Losses
associated with the existence or presence of any
Hazardous Substance at, in or under the Drilling Rig, or
any part thereof, or the release, emission or discharge
of any Hazardous Substance into the environment), or
damages to or destruction of any natural resources, and
strict liability in tort, (b) any claim or penalty
arising out of violations of Applicable Law, (c) death or
property damage of any person, and (d) any Liens in
respect of the Drilling Rig or any part or any component
thereof; and
(c) Taxes other than Excluded Taxes.
Appendix A to this Construction Supervisory Agreement sets forth
certain relevant definitions and procedures relating to this
indemnity.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, consents, directions,
approvals, instructions, requests, demands and other communications
required or permitted by the terms hereof to be given to any person
(collectively "Notices") shall be given in writing in and any such
Notice shall be deemed given (i) when personally delivered, or (ii)
three days after the date deposited in the United States mails, with
proper postage prepaid, for first class certified mail, return receipt
requested, or (iii) when signed for by the recipient, if delivered by
overnight courier or express mail service, addressed as follows:
if to Owner: BTM Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Administration
if to RBFE: RBF Exploration Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
if to Construction Supervisor
RBF Exploration II Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
and in any case with a copy to the Surety at its address specified in
the Performance Bond, or at such other address as either party hereto
may from time to time designate by Notice duly given in accordance
with the provisions of this Section 8.1 to the other party. No Notice
shall be deemed effective until given to the Surety.
SECTION 8.2 Successors and Assign; Third Party Beneficiaries.
(a) This Agreement shall be binding upon and inure to the benefit of
Owner, RBFE, Construction Supervisor, the Indemnified Parties and
their respective legal representatives, successors and permitted
assigns. Each of the Owner and/or RBFE may assign its rights
hereunder to the Indenture Trustee pursuant to the Trust Indenture,
and the Indenture Trustee may assign such rights to the Surety in the
circumstances contemplated by the Performance Bond. Except in
connection with the exercise by the Surety of its rights to perform on
behalf of Construction Supervisor pursuant to the Performance Bond,
Construction Supervisor shall not assign its rights or obligations
hereunder without the prior written consent of Owner, RBFE, Indenture
Trustee and the Surety. In no event, however, may the Construction
Supervisor assign its obligations under the indemnity provided in
Article VII hereof without the consent of the Indenture Trustee, the
Surety and the Owner, which may be withheld in its sole discretion.
(b) The Owner shall have the right to assign its rights
hereunder to an Affiliate of the Owner (and such Affiliate shall be
bound by all of the terms and provisions of this Agreement as if it
were the Owner hereto) and, in the event of the Owner exercises its
Put Option under and as defined in the Sale and Funding Agreement, it
shall assign its rights hereunder to RBFE or an Affiliate of RBFE (as
directed by RBFE).
(c) Indenture Trustee, RBFE and each party providing financing
to RBFE and/or the Owner in connection with the Project (including,
without limitation, each Note Holder and Credit Support Party, as such
terms are defined in the Trust Indenture) and Surety is an intended
third party beneficiary of this Agreement. Indenture Trustee and/or
RBFE shall each have the right, but not the obligation, in its sole
judgment and discretion, from time to time, but subject to the terms
of this Agreement, to make demand for performance and to proceed
against Construction Supervisor for the performance of any of its
obligations hereunder, and/or, subject to Section 3.2(d) above, to
proceed from time to time against Owner for the performance of any
such obligations, as Indenture Trustee, in its sole discretion, may
determine. In addition, each Indemnified Party is an intended third
party beneficiary of the indemnity provided in Article VII hereof and
may enforce the same directly.
(d) Monetary damage recoveries for claims made hereunder by the
Owner, RBFE and/or the Indenture Trustee shall be without duplication.
SECTION 8.3 GOVERNING LAW. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE) SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, BUT EXCLUDING (TO THE MAXIMUM EXTENT PERMITTED BY
LAW) ALL OTHER RULES RELATING TO CHOICE OF LAW, CHOICE OF FORUM OR
CONFLICT OF LAWS).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN NEW
YORK COUNTY, OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
OWNER, RBFE AND CONSTRUCTION SUPERVISOR HEREBY ACCEPTS FOR ITSELF AND
(TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH
OF OWNER, RBFE AND CONSTRUCTION SUPERVISOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THE SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE ANY PERSON FROM
OBTAINING JURISDICTION OVER OTHER PARTIES IN ANY COURT OTHERWISE
HAVING JURISDICTION.
(c) EACH OF OWNER, RBFE AND CONSTRUCTION SUPERVISOR HEREBY
IRREVOCABLY DESIGNATES CAPITOL SERVICES, INC. LOCATED AT ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF, SERVICE OF PROCESS IN
SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED
ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY OVERNIGHT COURIER TO
OWNER, RBFE AND CONSTRUCTION SUPERVISOR AT ITS ADDRESS SET FORTH
HEREIN, BUT THE FAILURE OF TO RECEIVE SUCH COPY SHALL NOT AFFECT IN
ANY WAY THE SERVICE OF SUCH PROCESS. EACH OF OWNER, RBFE AND
CONSTRUCTION SUPERVISOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO CONSTRUCTION SUPERVISOR AT ITS SAID ADDRESS,
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF OWNER, RBFE OR
INDENTURE TRUSTEE OR ANY OTHER PERSON TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST CONSTRUCTION SUPERVISOR IN ANY OTHER JURISDICTION.
(e) OWNER, RBFE AND CONSTRUCTION SUPERVISOR EACH HEREBY (I)
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN; (II)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFIES THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS, AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION.
SECTION 8.4 No Waiver; Amendments. No failure on the part of
Owner, RBFE or Indenture Trustee or any of their respective agents to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by Owner,
RBFE or Indenture Trustee or any of their respective agents of any
right, power, or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy.
This Agreement may not be amended, modified or any material terms
hereof waived without the express written consent of the Indenture
Trustee and the Surety.
SECTION 8.5 Counterparts. This Agreement may be executed in any
number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same agreement.
SECTION 8.6 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 8.7 Headings and Table of Contents. The headings and
table of contents contained in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
SECTION 8.8 Non-Petition Covenant. Each of the Owner and the
Construction Supervisor hereby agrees that until the 368th day
following payment in full of any and all Notes (as defined in the
Trust Indenture), neither the Owner nor the Construction Supervisor
will institute, and neither the Owner nor the Construction Supervisor
will join with others in instituting, any involuntary bankruptcy or
analogous proceeding against RBFE under any bankruptcy,
reorganization, receivership or similar law, domestic or foreign, as
now or hereafter in effect.
SECTION 8.9 August 12, 1999 Construction Supervisory Agreement
Superseded. This Agreement supercedes and replaces in its entirety
that certain Construction Supervisory Agreement dated August 12, 1999,
by and between RBFE as "Owner" and RBF Exploration II Inc., as
"Construction Supervisor" which prior agreement is terminated and of
no further force or effect as of the date hereof. In this connection
the Construction Supervisor and RBFE each represent to the other and
to the Owner that no amounts under the Original CSA are owed by either
the Construction Supervisor or RBFE to the other, no default has
occurred under the Original CSA, no requisitions for advance have been
submitted to the Indenture Trustee which are unfunded and outstanding
at this time, no other claim exists between the Construction
Supervisor and RBFE and there have been no amendments or modifications
to the Original CSA prior to the date of its replacement by this
Agreement.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BTM CAPITAL CORPORATION
By:_________________________
Name:
Title:
RBF EXPLORATION CO.
By:_________________________
Name:
Title:
RBF EXPLORATION II INC.
By:_________________________
Name:
Title:
SCHEDULE A
Insurance Requirements
(a) All Risk Property Insurance. Upon delivery to Owner of
the Drilling Rig under the Construction Contract, Construction
Supervisor shall, on behalf of Owner, keep the Drilling Rig insured,
in lawful money of the United States, against all such risks
(including without limitation, hull and machinery/increased value,
protection and indemnity risk, pollution liability, war risks (when
available) and, when laid up, port risk insurance, as well as such
excess policies over and above protection and indemnity and general
liability coverage which shall represent collective limits of not less
than $400,000,000), in such form and with such insurance companies or
underwriters as required under paragraph (c) as shall be at least as
protective as insurance maintained by prudent owners of vessels and
equipment similar to the Drilling Rig, engaged in international
contract offshore oil and gas operations, and in any event all as
reasonably acceptable to Indenture Trustee and the Owner and RBFE and,
so long as the Performance Bond is outstanding or amounts are due to
the Surety as a result of payments made by it thereunder, the Surety
and in compliance with the SDDI Contract. Without limiting the
generality of the foregoing, with respect to hull and
machinery/increased value insurance, including war risk (when
available), the Construction Supervisor shall insure the Drilling Rig
for an amount which is at least equal to the actual value of the
Drilling Rig, but in no event less than $275,000,000. Such insurance
shall cover marine and war risk perils, on hull and machinery, with
per occurrence deductibles not in excess of $1,000,000 and shall be
maintained in the broadest forms reasonably available in the American
and British insurance markets. The Construction Supervisor shall on
behalf of Owner and RBFE maintain protection and indemnity (or its
equivalent) insurance, including war risk protection and indemnity (or
its equivalent) coverage and coverage against pollution liability in
an amount not less than $400,000,000 (or such greater amount as may be
required from time to time under Oil Pollution Act of 1990 or other
environmental laws). All of the foregoing insurance shall have a per
occurrence deductible not to exceed $1,000,000 and be placed through
such underwriters or associations as specified in clause (d) below.
The Drilling Rig shall not operate in or proceed into any area then
excluded by trading warranties under its marine or war risk policies
(including protection indemnity or its equivalent) without satisfying
the conditions of the relevant policies, evidence of which shall be
furnished to Indenture Trustee and, so long as the Performance Bond is
outstanding or amounts are due to the Surety as a result of payments
made by it thereunder, the Surety.
(b) Liability; Workers' Compensation. Construction
Supervisor on behalf of Owner and RBFE shall maintain at all times
such worker's compensation, employer's liability, and longshoreman and
harbor worker's insurance as shall be required by applicable law.
Such policies shall provide that any loss under such insurance may be
paid directly to the entity to whom any liability covered by such
policies has been incurred.
(c) Payment Provisions. All payments made under policies
of insurance maintained under this Section shall be applied as set
forth in Section 5.2 of the Trust Indenture.
(d) Insurers. All insurance required under this Schedule A
shall be placed and kept with such insurance companies, Lloyd's
Syndicates, underwriters' associations, protection and indemnity clubs
or underwriting funds as are reputable, generally recognized within
the industry, and (i) in the case of hull and machinery insurance,
rated by either Standard & Poors Rating Services, a division of the
McGraw Hill Companies, Inc. ("S&P"), ▇▇▇▇▇'▇ Investors Services, Inc.
("Moody's) or Duff & ▇▇▇▇▇▇ Credit Rating Co. ("Duff") with at least
the equivalent to an S&P rating of BBB (and with at least 75% of the
companies, determined by dollar amount of policy coverage, rated by
S&P, Duff or Moody's with at least the equivalent to an S&P rating of
A) or, if not rated by S&P, Duff or Moody's then rated "excellent" or
better by A.M. Best, and (ii) in the case of protection and indemnity
risk insurance, rated by either S&P, Duff or Moody's with at least the
equivalent to an S&P rating of BBB.
(e) Taking by United States. During the continuance of a
taking, requisition or charter of the use of the Drilling Rig by any
governmental body of the United States of America, the provisions of
this Schedule A shall be deemed to have been complied with in all
respects as to the Drilling Rig if the United States Government or any
such governmental body shall have agreed (i) to reimburse Owner, RBFE
and Indenture Trustee for loss or damage resulting from the risks
indicated in paragraphs (a) and (b) of this Schedule A, or (ii) that
Owner, RBFE and Indenture Trustee shall be entitled to just
compensation therefor. In the event of any taking, requisition,
charter or loss of the Drilling Rig contemplated by this paragraph
(e), Construction Supervisor shall promptly furnish to Indenture
Trustee a sworn certificate of an officer of Construction Supervisor
stating that such taking, requisition, charter or loss has occurred
and, if there shall have been a taking, requisition or charter of the
Drilling Rig, that the United States Government or governmental body
has agreed (i) to reimburse Owner, RBFE and the Indenture Trustee for
loss or damage resulting from the risks indicated in the
above-mentioned paragraphs (a) and (b) or (ii) that Indenture Trustee,
Owner or RBFE, as the case may be, is entitled to just compensation
therefor.
(f) Mortgage Provisions. All insurance required under this
Schedule A shall be taken out in the name of Owner or on its behalf by
an Affiliate of Construction Supervisor and RBFE, the Indenture
Trustee and each Note Holder and the Sureties shall be named as an
additional insured under all liability policies (other than workers'
compensation and similar insurance), and RBFE, the Indenture Trustee
and, so long as the Performance Bond is outstanding or amounts are due
to the Surety as a result of payments made by it thereunder, the
Surety, shall be named as the loss payees, as their interests may
appear, under all physical damage policies with respect to the
Drilling Rig for any loss in excess of $5,000,000 or, after the
occurrence and during the continuation of any Event of Default, any
loss. All policies for such insurance shall also provide that (i)
there shall be no recourse against Owner (or its assignee), RBFE, the
Indenture Trustee or any Note Holder or any loss payee or additional
insured for the payment of premiums or commissions, (ii) if such
policies provide for the payment of club calls, assessments or
advances, there shall be no recourse against Owner (or its assignee),
RBFE, the Indenture Trustee or any Note Holder or any loss payee or
additional insured for the payment thereof. All policies shall
provide that the insurers shall provide to Owner (or its assignee),
RBFE, the Indenture Trustee and each Note Holder and any loss payee
and additional insured, as the case may be, 30 days prior notice of
any material change in the coverage of such insurance as well as ten
(10) days prior written notice of any cancellation of such insurance
in the event of non-payment of premiums and seven (7) days prior
written notice of any cancellation of such insurance for war risk.
(g) Compliance. Construction Supervisor shall not do any
act, nor permit any act to be done, whereby any insurance required by
this Schedule A shall or may be suspended, impaired or defeated, or
permit the Drilling Rig to engage in any voyage, to engage in any
activity or to carry any cargo not permitted under the policies of
insurance then in effect without first procuring comparable insurance
for such voyage, activity or the carriage of such cargo.
(h) Policies. Construction Supervisor, upon execution of
this Agreement, shall deliver to Owner, Indenture Trustee and Surety
certificates of insurance, evidencing the insurance maintained under
this Schedule A. Construction Supervisor, upon the request of Owner
or the Indenture Trustee, will promptly deliver to Owner or the
Indenture Trustee true copies of such policies.
(i) Opinion and Certificates. On the date hereof, and on
each anniversary and each material change in coverage, Construction
Supervisor shall promptly furnish or cause to be furnished to
Indenture Trustee and, at all time on and after the date hereof when
the Performance Bond is outstanding or amounts are due to the Surety
as a result of payments made by it thereunder, the Surety, a detailed
certificate or opinion (signed by a reputable insurance broker) as to
the insurance maintained by Construction Supervisor pursuant to this
Schedule A, specifying the respective policies of insurance covering
the same and attaching certificates of confirmation evidencing the
same and stating with regard to the insurance maintained by
Construction Supervisor pursuant to this Schedule A the amounts,
deductibles, and the risks against which such insurance is issued.
(j) Obligation to Collect. Construction Supervisor shall,
at no cost or expense to Owner, have the duty and responsibility to
make all proofs of loss and take any and all other steps necessary as
a prudent owner or as reasonably directed by Owner to effect
collections from underwriters for any loss under any insurance on or
in respect of the Drilling Rig or the operation thereof.
(k) Mortgage. The rights and obligations of Construction
Supervisor and Owner with respect to insurance shall be subject to
such other terms and conditions as shall be contained in the mortgage
described in Section 2.5(r)(ii) hereof, and in the event of any
inconsistency between the terms of this Exhibit A and the terms of
such mortgage, the terms of such mortgage shall take precedence.
EXHIBIT A
Form of Performance Bond
APPENDIX A
CERTAIN INDEMNITY DEFINITIONS AND PROCEDURES
"Applicable Law" shall mean, without limitation, all applicable
laws and treaties, and judgments, decrees, injunctions, within any
court, arbitration board, governmental entity and rules, regulations,
consents, licenses and permits of any governmental entity.
"After-Tax Basis" shall mean, with respect to any payment to
be received by an Indemnified Party, the amount of such payment (the
base payment) supplemented by a further payment (the additional
payment) to such Indemnified Party so that the sum of the base payment
plus the additional payment shall after deduction of the amount of all
federal, state, local and foreign income Taxes required to be paid by
such Indemnified Party in respect of the receipt or accrual of the
base payment and the additional payment (taking into account any
reduction in such income Taxes resulting from Tax benefits realized or
to be realized by the recipient in the taxable year of the payment as
a result of the payment or the event giving rise to the payment) be
equal to the amount required to be received. Such calculations shall
be made on the basis of the highest applicable Federal income tax
statutory rate applicable to corporations for all relevant periods and
at the highest applicable statutory income tax rates applicable to
corporations in the state, local and foreign taxing jurisdiction
applicable to the Transactions for all relevant periods and shall take
into account the deductibility of state, local and foreign income
taxes, or crediting of foreign income taxes, for Federal income tax
purposes. A certificate as to additional amounts payable to an
Indemnified Party submitted by such Indemnified Party to the
Construction Supervisor shall show in reasonable detail the additional
amount payable and the calculations used to determine in good faith
such amount and shall be deemed prima facie correct.
"Claim" shall mean any liability (including in respect of
negligence (whether passive or active or other torts), strict or
absolute liability in tort or otherwise, warranty, latent or other
defects (regardless of whether or not discoverable), statutory
liability, property damage, bodily injury or death), obligation, loss,
settlement, damage, penalty, claim, action, suit, proceeding (whether
civil or criminal), judgment, penalty, fine and other legal or
administrative sanction, judicial or administrative p roceeding, cost,
expense or disbursement, including reasonable legal, investigation and
expert fees, expenses and reasonable related charges, of whatsoever
kind and nature.
"Current Basis", when used herein with respect to an
indemnity obligation of the Construction Supervisor, shall mean the
payment, fulfillment or discharge of such obligation promptly upon the
Construction Supervisor's having been notified by an Indemnified Party
of an actual or potential Loss or Claim with respect to such
Indemnified Party and the Transaction, without regard to the issue of
the possible Fault of such Indemnified Party.
"Excluded Taxes" shall mean, with respect to any particular
Indemnified Party, any Taxes imposed by any United States federal,
state or local government based on or measured by the amount of
capital, net worth and net or gross income or receipts attributable to
fees or other compensation that such Indemnified Party receives from
the Construction Supervisor or any Affiliate of the Construction
Supervisor in connection with the Transaction, except (i) any state or
local income Taxes (other than those imposed by the jurisdiction of
the place of business of the Indemnified Party) of the foregoing
nature to the extent imposed as a result of the such Indemnified
Party's participation in the Transaction or (ii) any withholding Taxes
(in both cases, including any penalties, interest additions to tax or
other costs or expenses applicable in connection therewith).
"Fault", when used with respect to an Indemnified Party and a
Loss or Claim to which an Indemnified Party would, but for the
occurrence of Fault, be entitled to be indemnified hereunder, shall
mean the gross negligence or wilful misconduct of such Indemnified
Party in the performance of such Indemnified Party's obligations under
the Transaction Documents to which such Indemnified Party is a party
as expressly judicially determined in the final judgment of a court
having jurisdiction over such Indemnified Party and the relevant
subject matter as to which gross negligence or wilful misconduct has
been alleged, such judgment being final and being or having become
subject to no further appeals therefrom (provided that if such court
is the U.S. District Court for the Southern District of New York, a
final judgment of such court even though such judgment is subject to
appeal, it being understood that if such judgment is reversed or
vacated on such appeal, "Fault" shall be deemed not to have been
adjudged by such District Court), but only to the extent that such
adjudged gross negligence or wilful misconduct was the cause of such
Loss and Claim.
"Hazardous Substances" means (a) any substance (i) defined
as a "hazardous substance under the federal Comprehensive
Environmental Response, Compensation and Liability Act, or (ii)
regulated as a "hazardous waste" under the federal Resource
Conversation and Recovery Act, (b) any petroleum product, (c) any
asbestos-containing material, (d) polycholorinated biphenyls, (e)
"source material", "byproduct material" and "special nuclear
material", regulated under the Atomic Energy Act, and (f) any
substance regulated as a hazardous air pollutant, and, to the extent
not included in any of the foregoing, any substance in any form
whatsoever (including products) regulated, restricted or controlled by
or under any Environmental Law.
"Loss" shall mean any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs, expenses and
disbursements, including legal fees and expenses of whatever kind and
nature.
"Taxes" shall mean all fees, taxes (including without
limitation sales taxes, use taxes, stamp taxes, value-added taxes, ad
valorem taxes and property taxes (personal and real, tangible and
intangible) and taxes imposed on, based on or measured by capital, net
worth, and net or gross income or receipts), levies, assessments,
withholdings and other charges and impositions of any nature, plus all
related interest, penalties, fines and additions to tax, now or
hereafter imposed by any federal, state, local or foreign government
or other taxing authority.
ARTICLE 2.
Certain Indemnification Procedures
Section 2.1. Full Payment. All indemnity amounts payable to
any Indemnified Party by the Construction Supervisor under the
Indemnity (as hereinafter defined) shall be paid in full without set-
off or counterclaim.
Section 2.2. Notices. If any Indemnified Party hereunder has
actual knowledge of any Losses hereby indemnified against, it shall
give prompt written notice thereof to the Construction Supervisor
(including, without limitation, copies of any notices received from
any taxing authority with respect to any Tax that is subject to
indemnification hereunder) and if the Construction Supervisor has
knowledge of any Losses or the assertion of any Claims hereby
indemnified against, it shall give prompt written notice thereof to
the relevant Indemnified Party. Notwithstanding the foregoing, the
failure of any Indemnified Party to promptly notify the Construction
Supervisor as provided in this Section 2.2, shall not release the
Construction Supervisor from any of its obligations to indemnify such
Indemnified Party hereunder.
Section 2.3. Losses or Claims Other Than Taxes. In the case of
the indemnification provided under Article VII of the Construction
Supervisory Agreement (the "Indemnity") for Losses or Claims other
than with respect to indemnification for Taxes, the following shall
apply.
(a) Notice of Proceedings; Defense of Claims; Limitations.
(i) In case any action, suit or proceeding shall be
brought against any Indemnified Party for which the Construction
Supervisor is responsible under the Indemnity, such Indemnified
Party shall promptly notify the Construction Supervisor of the
commencement thereof (provided that the failure to so provide
such notice shall not relieve the Construction Supervisor from
any liability which it may have to an Indemnified Party pursuant
to the Indemnity) and the Construction Supervisor may, at its
cost and expense, participate in and to the extent that it shall
wish (subject to the provisions of the following paragraph),
assume and control the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party and, subject to Clause
(iii), settle or compromise the same.
(ii) the Construction Supervisor or its insurer(s)
shall have the right, at its or their cost and expense, to
investigate or, if the Construction Supervisor and its
insurer(s) shall agree not to dispute liability hereunder or
under any insurance policies pursuant to which coverage is
sought, defend, or participate in the defense of, any action,
suit or proceeding, with counsel reasonably satisfactory to the
relevant Indemnified Party, relating to any Losses for which
indemnification is sought pursuant to the Indemnity, and each
Indemnified Party shall cooperate, at the cost and expense of
the Construction Supervisor, with the Construction Supervisor or
its insurer(s) with respect thereto; provided, that the
Construction Supervisor shall not be entitled to control the
defense of any such action, suit or proceeding (a) unless the
Construction Supervisor shall have acknowledged in writing its
obligation to indemnify such Indemnified Party in respect
thereof (without prejudice to the Construction Supervisor's
right to assert the Fault of the Indemnified Party), or (b) if
in the reasonable judgment of any Indemnified Party, any such
action, suit or proceeding with respect to such Losses could
have a material adverse impact on the business of such
Indemnified Party or involve the potential imposition of
criminal liability on such Indemnified Party or involve a
conflict of interest between such Indemnified Party and the
Construction Supervisor. In connection with any such action,
suit or proceeding being controlled by the Construction
Supervisor, such Indemnified Party shall have the right to
participate therein, at its sole cost and expense, with counsel
of its choice. The Construction Supervisor shall supply the
Indemnified Party with such information reasonably requested by
each Indemnified Party as is necessary or advisable for such
Indemnified Party to control or participate in any proceeding to
the extent permitted by this Section 2.3. Nothing contained in
this Section 2.3 shall be deemed to require an Indemnified Party
to contest any Loss or to control any action, suit or proceeding
with respect thereto.
(iii) Provided that the Construction Supervisor is
not in default of its obligations under the Indemnity, an
Indemnified Party shall not enter into a settlement or other
compromise with respect to any Losses for which indemnification
is sought hereunder without the prior written consent of the
Construction Supervisor, which consent shall not be unreasonably
withheld or delayed, unless such Indemnified Party waives its
right to be indemnified with respect to such Losses under this
Section 2.3. The Construction Supervisor shall not enter into a
settlement or other compromise with respect to any Losses absent
the giving to such Indemnified Party of prior written notice of
such settlement or compromise, and the Construction Supervisor
will not enter into such a settlement or other compromise absent
such Indemnified Party prior written consent, which consent
shall not be unreasonably withheld or delayed unless if in the
reasonable judgment of such Indemnified Party, such settlement
or compromise could have a material adverse impact on the
business of such Indemnified Party or involve the potential
imposition of criminal liability on such Indemnified Party;
provided that such consent shall not be required if such
settlement or compromise provides for the total and irrevocable
release of such Indemnified Party with respect to all claims
relating to such Losses without admission of any liability of
such Indemnified Party with respect to such Losses and imposes
no conditions or restrictions upon such Indemnified Party.
(iv) In any circumstance in which the Construction
Supervisor shall not be entitled to control the defense of any
action, suit or proceeding described above, or compromise or
settle any Losses, the Construction Supervisor shall have the
right to participate therein, at its sole cost and expense, with
counsel reasonably acceptable to the involved Indemnified Party;
provided, that the Construction Supervisor's participation shall
not interfere in any way with the defense of such case or the
overall strategy for the contesting thereof; provided, further,
that nothing in this subparagraph (iv) shall prevent the
Construction Supervisor from bringing its own separate cause of
action to the extent permitted by Applicable Law.
(b) Information. The Construction Supervisor will provide
the relevant Indemnified Party with such information not within the
control of such Indemnified Party, as is in the Construction
Supervisor's or any of its Affiliates' control or is reasonably
available to the Construction Supervisor or such Affiliate, which such
Indemnified Party may reasonably request and will otherwise cooperate
with such Indemnified Party so as to enable such Indemnified Party to
fulfill its obligations under this Section 2.3. The Indemnified Party
shall, at the Construction Supervisor's cost and expense, supply the
Construction Supervisor with such information not within the control
of the Construction Supervisor, as is in such the Construction
Supervisor's control or is reasonably available to such Indemnified
Party, which the Construction Supervisor may reasonably request to
control or participate in any proceeding to the extent permitted by
Section 2.3.
Section 2.4. Losses or Claims With Respect to Taxes. In
the case of the indemnification provided under the Indemnity for
Losses or Claims with respect to indemnification for Taxes, the
following shall apply.
(a) Payment. Each payment shall be paid either (i) when
due directly to the applicable taxing authority by the Construction
Supervisor if it is permitted to do so, or (ii) where direct payment
is not permitted, and with respect to gross up amounts, in immediately
available funds to the Indemnified Party by the later of (A) 5 days
following the Construction Supervisor's receipt of the Indemnified
Party's written demand for the payment or (B) in the case of any
Indemnified Party demand for which the Construction Supervisor has
requested review and determination pursuant to paragraph (b) below,
the completion of such review and determination; provided, however, in
no event later than the date which is five Business Days prior to the
date on which such Taxes are required to be paid to the applicable
taxing authority.
(b) Independent Examination. Within 5 days after the
Construction Supervisor receives any request for any Indemnified Party
payment with respect to Taxes (other than in the case of payments to
be made on an After-Tax Basis) from the Indemnified Party, the
Construction Supervisor may request in writing that an independent
public accounting firm selected by the Indemnified Party and
reasonably acceptable to the Construction Supervisor review and
determine on a confidential basis the amount of any Indemnified Party
payment by the Construction Supervisor to the Indemnified Party
pursuant to this Section 2.4. The Indemnified Party shall cooperate
with such accounting firm and supply it with all information
reasonably necessary for the accounting firm to conduct such review
and determination (but not tax returns and books); provided that such
accounting firm shall agree in writing in a manner satisfactory to the
Indemnified Party to maintain the confidentiality of such information.
The fees and disbursements of such accounting firm will be paid by the
Construction Supervisor.
(c) Tax Benefit. If, as the result of any Taxes paid or
indemnified against by the Construction Supervisor under the
Indemnity, the aggregate Taxes actually paid by the Indemnified Party
for any taxable year and not subject to indemnification pursuant to
the Indemnity are less (whether by reason of a deduction, credit,
allocation or apportionment of income or otherwise) than the amount of
such Taxes that otherwise would have been payable by such Indemnified
Party (a "Tax Benefit"), then to the extent such Tax Benefit was not
taken into account in determining the amount of indemnification
payable by the Construction Supervisor, such Indemnified Party shall
pay to the Construction Supervisor the lesser of (A) (y) the amount of
such Tax Benefit, plus (z) an amount equal to any United States
federal, state or local income tax benefit resulting to the
Indemnified Party from the payment under clause (y) above and this
clause (z) (determined using the same assumptions as set forth in the
second sentence under the definition of After-Tax Basis) and (B) the
amount of the Indemnified Party payment giving rise to such Tax
Benefit. If it is subsequently determined that the Indemnified Party
was not entitled to such Tax Benefit, the portion of such Tax Benefit
that is required to be repaid or recaptured will be treated as Taxes
for which the Construction Supervisor must indemnify the Indemnified
Party pursuant to the Indemnity. Notwithstanding anything to the
contrary herein, the Indemnified Party shall determine the allocation
of any tax benefits, savings, credit, deduction or allocation in its
sole discretion to be exercised in good faith and each position to be
taken on its tax return shall be in its sole control and it shall not
be required to disclose any tax return or related documentation to any
Person.
(d) Refund. If the Indemnified Party obtains a refund or
credit of all or part of any Taxes paid, reimbursed or advanced by the
Construction Supervisor pursuant to the Indemnity, the Indemnified
Party promptly shall pay to the Construction Supervisor (x) the amount
of such refund or credit (net of any Tax payable by the Indemnified
Party as a result of the receipt or accrual of such refund or credit)
plus (y) an amount equal to any United States federal, state or local
income tax benefit realized by such Indemnified Party by reason of
such payment to the Construction Supervisor (determined using the same
assumptions as set forth in the second sentence under the definition
of After-Tax Basis); provided that the amount payable to the
Construction Supervisor pursuant to this sentence shall not exceed the
amount of the Indemnified Party payment in respect of such refunded or
credited Taxes that was made by the Construction Supervisor. If it is
subsequently determined that the Indemnified Party was not entitled to
such refund or credit, the portion of such refund or credit that is
required to be repaid or recaptured will be treated as Taxes for which
the Construction Supervisor must indemnify the Indemnified Party
pursuant to Indemnity.
(e) Reports. If any report, statement or return is
required to be filed by the Indemnified Party with respect to any Tax
that is subject to indemnification under the Indemnity, the
Construction Supervisor will (1) notify the Indemnified Party in
writing of such requirement not later than 30 days prior to the date
such report, statement or return is required to be filed (determined
without regard to extensions) and (2) either (y) unless directed by
the Indemnified Party otherwise, if permitted by applicable law,
prepare such report, statement or return for filing by the
Construction Supervisor, send a copy of such report, statement or
return to the Indemnified Party and timely file such report, statement
or return with the appropriate taxing authority, or (z) in all other
cases, prepare and furnish to such the Indemnified Party not later
than 30 days prior to the date such report, statement or return is
required to be filed (determined without regard to extensions) a
proposed form of such report, statement or return for filing by the
Indemnified Party.
Each of the Indemnified Party and the Construction
Supervisor, as the case may be, will timely provide the other, at the
Construction Supervisor's expense, with all information in its
possession that the other party may reasonably require and request to
satisfy its tax filing obligations. the Construction Supervisor
(A) shall hold each Indemnified Party harmless on an After-Tax Basis
from and against all liabilities arising out of any insufficiency or
inaccuracy of any report, statement or return and (B) shall indemnify
each Indemnified Party for all liabilities, costs and expenses
(including reasonable attorneys', accountants' and other professional
fees for tax related filings or reviews) of such Indemnified Party
with respect to all returns, reports or statements to which this
Section 2.4 applies.
