EXHIBIT 10.30
RIG MANAGEMENT AGREEMENT
THIS RIG MANAGEMENT AGREEMENT(the "Agreement") is entered
into effective as of the 1st day of April, 1999, by and between
CLIFFS DRILLING COMPANY, a Delaware corporation (hereinafter
referred to as "Owner"), and R&B FALCON DRILLING USA, INC., a
Delaware corporation (hereinafter referred to as "Manager").
WITNESSETH:
WHEREAS, Owner is the owner and operator of the following
xxxx-up drilling rigs (individually a "Vessel" and collectively
the "Vessels"):
Cliffs Drilling 100 Liberia Official No. 9179
Cliffs Drilling 150 Liberia Official No. 8909
Cliffs Drilling 151 Liberia Official No. 8572
Cliffs Drilling 152 Liberia Official No. 8530
Cliffs Drilling 153 Liberia Official No. 8353
Cliffs Drilling 154 Liberia Official No. 8573
Cliffs Drilling 155 U.S. Official No. 621912
Cliffs Drilling 156 Panama Official No. 17081-PEXT-3
Cliffs Drilling 180 Liberia Official No. 9792
Cliffs Drilling 200 Liberia Official No. 8539
WHEREAS, Owner desires to engage Manager to manage the
Vessels, and Manager desires to perform management services on
behalf of Owner with respect to the Vessels, in accordance with
the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby represent, warrant, covenant,
and agree as follows:
ARTICLE I
MANAGEMENT SERVICES
1.1 Term of Agreement. Manager shall perform or arrange
for the performance of the management services provided for
herein for the term of this Agreement. The term of this
Agreement shall commence as of the date hereof and shall end upon
the expiration of 60 days prior written notice by either Manager
or Owner to terminate this Agreement with respect to all of the
Vessels; provided, however, that Manager may not terminate this
Agreement with respect to any Vessel without the written consent
of Owner if such termination would result in a breach of or
default under any then-current drilling contract for such Vessel;
and provided, further, that Owner shall remain liable to Manager
for all accrued but unpaid management fees and cost
reimbursements due Manager pursuant to Section 1.3 of this
Agreement, notwithstanding any such termination..
1.2 Services to be Performed. Subject to the terms and
conditions of this Agreement, Manager agrees to use its
reasonable best efforts during the term of this Agreement to (a)
maintain the Vessels in good repair, (b) obtain for the Vessels
drilling contracts with reputable and solvent persons, at market
rates and terms, and (c) operate the Vessels profitably. In this
regard, Manager shall provide the following:
(i) all necessary and desirable management services,
including management of the day-to-day operations of the
Vessels and long-range planning for the operations of the
Vessels;
(ii) all necessary and desirable accounting, tax, and
clerical services, including maintaining the necessary and
desirable books and records with respect to the Vessels,
preparation of monthly, quarterly and annual financial
reports and tax returns, and all necessary and desirable
payroll and accounts payable services;
(iii) all necessary and desirable purchasing,
maintenance and personnel services, including purchasing and
expediting of supplies for the Vessels, maintenance and
repair of the Vessels, and hiring, training and safety of
personnel to work on the Vessels;
(iv) all necessary and desirable bidding, contracting
and marketing services, including all necessary efforts to
maintain maximum utilization of the Vessels;
(v) all necessary working capital to fund the direct
and indirect costs associated with operating and maintaining
the Vessels; and
(vi) as necessary, Manager's executive and senior
management personnel and all other personnel required in
order to perform the services enumerated in this Paragraph
1.2.
1.3 Compensation. During the term of this Agreement, the
following compensation will be due with respect to each Vessel:
(i) Management Fee. In lieu of any indirect cost
allocation or reimbursement obligation, Owner will pay to
Manager on a monthly basis in arrears a fixed management fee
of $700 per day with respect to each Vessel.
(ii) Profit Sharing. Owner and Manager will share
ratably in the net profit or loss resulting from each
Vessel, after taking into account all direct operating costs
paid by Manager. The profit sharing ratio shall be 80%
(Owner) and 20% (Manager). Such profit or loss shall be
determined on a pre-tax basis in accordance with generally
accepted accounting principles consistently applied.
Manager shall prepare and submit to Owner within twenty (20)
days after the end of each calendar quarter a management
report identifying the direct costs incurred by, and
reflecting the net profit and loss resulting from, each
Vessel. In the event that the quarterly management report
indicates a net profit resulting from the Vessels, Manager
shall remit to Owner, within thirty (30) days following the
end of the calendar quarter, an amount equal to 80% of such
net profit. In the event that the quarterly management
report indicates a net loss resulting from the Vessels,
Owner shall remit to Manager, within thirty (30) days
following the end of the calendar quarter, an amount equal
to 80% of such net loss.
1.4 Capital Expenditures. During the term of this
Agreement, Owner will pay for the cost of capital expenditures
incurred in connection with the Vessels and for ancillary
equipment acquired for the Vessels. Capital expenditures are
defined to include all such betterments which extend the useful
or economic life of the Vessel or its equipment.
ARTICLE II
CONFLICT OF INTEREST
2.1 Conflict of Interest. Owner expressly acknowledges
that Manager and its affiliates own and operate drilling rigs
which may compete with the business of Owner, and, accordingly,
that conflicts of interest may arise between the interest of
Manager and its affiliates in the employment of drilling rigs
owned and/or operated by them, on the one hand, and the interest
of Owner in the employment of the Vessels, on the other hand.
Owner hereby waives any and all rights, remedies and recourses
which it might otherwise have under law or under this Agreement
against Manager and any of its affiliates arising out of such
conflicts of interest as long as all reasonable efforts are made
to secure employment for the Vessels in the same manner and on
the same terms as efforts are made to secure employment for the
drilling rigs owned and/or operated by Manager and its
affiliates. Without limiting the generality of the foregoing,
Manager, or any of its affiliates, shall not be deemed to have
been unfair or to have acted in bad faith or in breach of any
obligation that Manager or any of its affiliates may have under
law or under this Agreement where a decision is made to employ a
drilling rig owned and/or operated by Manager or its affiliates
rather than the Vessels when Manager or its affiliate determines
in good faith that (i) such drilling rig is more suitable to the
requirements of the particular job either because of the
capabilities of such drilling rig, its location, crew, relatively
better availability than the Vessels, or other factors; (ii) the
contracting party indicate a preference for such other drilling
rig; or (iii) other opportunities to employ the Vessels are then
available, or may reasonably be expected to be available in the
relatively near future, on reasonably comparable terms and
conditions to Owner.
ARTICLE III
COVENANTS
3.1 Covenants of the Manager. Manager hereby covenants and
agrees with Owner that:
(a) It will act in good faith and perform its obligations
hereunder in a timely, professional, and safe manner and in
accordance with standard industry practices and applicable
manufacturers' specifications;
(b) It will, in all material respects, carry out its
obligations hereunder in accordance with all applicable laws,
regulations, and ordinances;
(c) It will promptly inform Owner of any material adverse
change in the condition of the Vessels;
(d) It will at all times give Owner and its representatives
access to the Vessels;
(e) It will direct that proceeds of insurance on the
Vessels or other property of Owner be paid to appropriate parties
under applicable mortgages and drilling contracts, and otherwise
to Owner (and not to Manager).
3.1 Covenants of the Owner. Owner covenants and agrees
with Manager that:
(a) It will act in good faith and perform its obligations
hereunder;
(b) It will permit Manager to have and maintain custody of
the Vessels during the term of this Agreement.
ARTICLE IV
INDEMNIFICATION
4.1 Acknowledgment of Risks and Hazards. It is stipulated
and agreed by Owner that operation of the Vessels involves
substantial risks and hazards. Manager shall not be held liable
or responsible to Owner for the negligence of Manager or its
agents, independent contractors, or employees. Except as
otherwise provided in this Agreement, Manager shall have no
liability or obligation to Owner for any decision made or action
taken in connection with the discharge of Manager's rights,
duties, and obligations hereunder if such decision or action is
made and taken in good faith, and Owner shall indemnify and hold
harmless Manager (and all shareholders, officers, directors, and
employees thereof) from and against any and all claims, demands,
liabilities, costs, and causes of action arising out of or
incident to any such decision or action, the negligence of
Manager notwithstanding. Manager shall be liable, however, to
Owner for all damages suffered by Owner as a result of Manager's
own gross negligence or willful misconduct with respect to
operation of the Vessels or breach of this Agreement. The
indemnification rights herein contained shall be cumulative of,
and in addition to, any and all rights, remedies, and recourses
to which Manager shall be entitled, whether pursuant to other
provisions of this Agreement, at law, or in equity. Manager's
rights under this Section 4.1 shall survive the termination of
such Manager's status as manager of the Vessels.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered by
(i) personal delivery, (ii) expedited delivery service, (iii)
certified or registered mail, postage prepaid, or (iv) facsimile
with confirmation of transmission. Any such notice shall be
deemed given upon its receipt at the following address:
(a) If to the Owner, at:
Cliffs Drilling Company
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(b) If to the Manager, at:
R&B Falcon Drilling U.S.A., Inc.
000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn: Xx. Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Any party may, by notice given in accordance with this Section
5.1 to the other party, designate another address or person for
receipt of notices hereunder.
5.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements, written
or oral, with respect to the subject matter hereof.
5.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended,
superseded, canceled, renewed, or extended, and the terms hereof
may be waived, only by a written instrument signed by Owner and
Manager or, in the case of a waiver, by the party waiving
compliance. No delay on the part of a party in exercising any
right, power, or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any
such right, power, or privilege, or any single or partial
exercise of any such right, power, or privilege, preclude any
further exercise thereof. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
5.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE SUBSTANTIVE
LAWS OF THE STATE OF TEXAS EXCLUDING ITS CHOICE OF LAW RULES.
5.5 Binding Effect; No Assignment; No Third Party
Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
permitted assigns. Unless otherwise expressly provided herein,
no rights or obligations under this Agreement are assignable.
Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of
this Agreement on any person other than the parties to this
Agreement and their respective successors and permitted assigns.
5.6 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all,
the parties hereto.
5.7 Severability of Provisions. If any provision, or any
portion of any provision, of this Agreement shall be held invalid
or unenforceable, or if the application of any provision or any
portion thereof to any person or circumstances shall be held
invalid or unenforceable, the remaining portion of such
provision, or such provision as it applied to other persons or
circumstances, and the remaining provisions shall not be affected
thereby.
5.8 References and Titles. All references in this
Agreement to articles, sections, subsections, and other
subdivisions refer to corresponding articles, sections,
subsections, and other subdivisions of this Agreement unless
expressly provided otherwise. Titles appearing at the beginning
of any of such subdivisions are for convenience only and shall
not constitute part of such subdivision and shall be disregarded
in construing the language contained in such subdivision. The
words "this Agreement," "herein," "hereby," "hereunder," and
words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited.
Words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires.
5.9 Independent Contractor Status. The parties hereto
agree that the Manager is an independent contractor and that no
employee of Manager is, or is to be deemed for any purpose to be,
an employee of Owner.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
OWNER: CLIFFS DRILLING COMPANY
By:_____________________________
Xxxxxxx X. Xxxxxxx, President
MANAGER: R&B FALCON DRILLING USA, INC.
By:_____________________________
Xxxxxx Xxxxxxx, President
