CONSTRUCTION SERVICES AGREEMENT
Exhibit
10.2
This CONSTRUCTION
SERVICES AGREEMENT (this “Agreement”),
dated
as of May 15, 2006, is entered into by and among Standard Drilling,
Inc., a
Delaware
corporation (the “Company”),
Romfor
West Africa, Ltd, a Limited Liability Bahamian corporation (“Romfor”),
and
Xxxxxx Xxxxxxx, an individual residing at Houston, Texas (“Xxxxxxx”
and,
together with Romfor, the “Service
Providers”).
WHEREAS,
the Service Providers are engaged in the business of designing drilling rigs,
acquiring drilling rig materials and components, either new or used from various
sources, and constructing drilling rigs from such materials and
components;
WHEREAS,
the Company desires to engage and retain the Service Providers for the term
and
purposes hereinafter set forth and the Service Providers desire to provide
to
the Company the Services (as hereinafter defined) for the consideration
hereinafter stated; and
WHEREAS,
at the request of the Company, the Service Providers (a) are currently providing
exclusive Acquisition Services (as hereinafter defined) and Construction
Services (as hereinafter defined) with respect to three drilling rigs in
accordance with the inventory and cost estimates set forth on Exhibit A and
three additional drilling rigs to be completed on or about January 2007 and
otherwise substantially in accordance with the inventory and cost estimates
set
forth on Exhibit A (collectively, the “Existing
Rig Constructions”)
and (b)
will provide exclusive Services (as hereinafter defined) for additional drilling
rigs in accordance with the terms and conditions of this Agreement;
NOW,
THEREFORE, in consideration of the engagement of the Service Providers by the
Company, and of the compensation and other remuneration to be paid by the
Company to the Service Providers for such engagement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, each of Romfor, Xxxxxxx and the Company
hereby agree as follows:
ARTICLE
1
DEFINITIONS;
CONSTRUCTION
1.1
Definitions.
As
used in
the Agreement, the following terms shall have the respective meanings set forth
below or set forth in the provision of the Agreement referenced by such
term:
“AAA”
has
the
meaning ascribed to such term in Section 7.9(b) of this Agreement.
“Acceptance
Notice”
has
the
meaning ascribed to such term in Section 3.2 of this Agreement.
“Accepted
Rig”
has
the
meaning ascribed to such term in Section 3.2 of this Agreement.
“Acquired
Property”
has
the
meaning ascribed to such term in Section 3.1 of this Agreement.
“Acquisition
Services”
has
the
meaning ascribed to such term in Section 2.2(a)(ii) of this
Agreement.
“Additional
Expenses”
has
the
meaning ascribed to such term in Section 2.2(b) of this Agreement.
“Agreement”
has
the
meaning ascribed to such term in the preamble of this document, as the same
may
be amended from time to time.
“Base
Compensation”
has
the
meaning ascribed to such term in Section 5.1 of this Agreement.
“Bonus”
has
the
meaning ascribed to such term in Section 5.2 of this Agreement.
“Xxxxxxx”
has
the
meaning ascribed to such term in the preamble of this Agreement.
“Claim”
means
any and all claims, demands, suits, causes of action, settlements, judgments,
damages, fines, liability, losses, costs and expenses (including, without
limitation, court and arbitration costs, experts’ fees and attorneys’ fees),
whether arising in equity, at common law, or by statute, or under the law of
property, contract or tort (including, without limitation, negligence and strict
liability without regard to fault), of every kind or character.
“Claimant”
has
the
meaning ascribed to such term in Section 7.9(b) of this Agreement.
“Company”
has
the
meaning ascribed to such term in the preamble of this Agreement.
“Confidential
Information”
has
the
meaning ascribed to such term in Section 6.1 of this Agreement.
“Construction
Services”
has
the
meaning ascribed to such term in Section 2.2(a)(iii) of this
Agreement.
“Defaulting
Party”
has
the
meaning ascribed to such term in Section 4.2(a) of this Agreement.
“Design
Services”
has
the
meaning ascribed to such term in Section 2.2(a)(i) of this
Agreement.
“Effective
Date”
has
the
meaning ascribed to such term in Section 2.1 of this Agreement.
“Existing
Rig Constructions”
has
the
meaning ascribed to such term in the preamble of this Agreement.
“Initial
Term”
has
the
meaning ascribed to such term in Section 4.1 of this Agreement.
“Material
Default”
has
the
meaning ascribed to such term in Section 4.2(a) of this Agreement.
Page
2
“Non-Defaulting
Party”
has
the
meaning ascribed to such term in Section 4.2(a) of this Agreement.
“Ordered
Rig”
has
the
meaning ascribed to such term in Section 2.2(a)(ii) of this
Agreement.
“Person”
means
any individual or entity, including, without limitation, any corporation,
limited liability company, company (general or limited), joint venture,
association, joint stock company, trust or unincorporated
organization.
“Requested
Drilling Rig”
has
the
meaning ascribed to such term in Section 2.2(a)(i) of this
Agreement.
“Respondent”
has
the
meaning ascribed to such term in Section 7.9(b) of this Agreement.
“Romfor”
has
the
meaning ascribed to such term in the preamble of this Agreement.
“Rules”
has
the
meaning ascribed to such term in Section 7.9(b) of this Agreement.
“Service
Providers”
has
the
meaning ascribed to such term in the preamble of this Agreement.
“Services”
has
the
meaning ascribed to such term in Section 2.2(b).
“Term”
has
the
meaning ascribed to such term in Section 4.1 of the Agreement.
“Work
Product”
has
the
meaning ascribed to such term in Section 6.1 of this Agreement.
1.2
Construction. All article, section, subsection and
exhibit references used in this Agreement are to this Agreement unless otherwise
specified. Exhibits attached to this Agreement constitute a part of this
Agreement and are incorporated herein. Unless the context of this Agreement
clearly requires otherwise, (a) the singular shall include the
plural and the plural shall include the singular wherever and as often as may
be
appropriate, (b) the words “includes” or “including” shall mean
“including without limitation,” and (c) the words “hereof,”
“herein,” “hereunder” and similar terms in this Agreement shall
refer to this
Agreement as a whole and not any particular section or article in which such
words appear.
ARTICLE
2
SERVICES
OF SERVICE PROVIDER
2.1
Engagement;
Effective Date. Subject
to
the terms of this Agreement, the Company agrees to engage the Service Providers
to provide, and the Service Providers agree to provide, the Services to the
Company beginning as of the date of this Agreement (the “Effective
Date”)
and
continuing until the last day of the Term.
Page
3
2.2
Services.
(a)
During
the Term, the Service Providers shall perform the following services for the
Company and such other services as the Company and the Service Providers
mutually agree:
(i)
upon the
request of the Company from time to time, provide general and detailed design
services, including specifications and limitations for each material component
thereof, for drilling rigs (each, a “Requested
Drilling Rig”)
based
upon the proposed use and operation of such Requested Drilling Rig as specified
by the Company and including a proposed completion date for each such Requested
Drilling Rig (collectively, the “Design
Services”);
(ii)
provide
construction cost estimates for each Requested Drilling Rig, including line
item
cost estimates and proposed sources for each material or component thereof
and,
if the cost estimate is approved in writing by the Company (together with the
Existing Rig Constructions, an “Ordered
Rig”),
acquire such materials and components for such Ordered Rig in a timely and
efficient manner on behalf of, and at the cost of, the Company (the
“Acquisition
Services”);
(iii)
construct
each Ordered Rig in accordance with the design and cost estimates approved
in
writing by the Company for such Ordered Rig (the “Construction
Services”);
and
(iv)
provide
all necessary engineering, material, equipment, labor, supervision, tools and
other services necessary to complete the Design Services, the Acquisition
Services and the Construction Services.
(b)
The
services to be performed by the Service Providers pursuant to this Agreement
are
collectively referred to herein as the “Services”.
The
Company shall pay, in accordance with Section 3.1, the cost of the materials
and
components acquired pursuant to the Acquisition Services and for any labor
or
other expenses relating to any Ordered Rig approved in writing by the Company
(the “Additional
Expenses”).
2.3
Status
of the Service Providers.
The
parties agree that the Service Providers are to provide the Services in the
capacity of an independent contractor and not as an employee or agent of the
Company. The Company shall have no right to control or direct the manner in
which the Services are to be performed. The Service Providers shall be solely
responsible for all federal, state or local taxes required by law to be paid
with respect to the payments and benefits described in this
Agreement.
Notwithstanding the foregoing, during the Term, the Service Providers shall
not
provide any service that is a Service to any other Person without the prior
written consent of the Company.
2.4 The
Service Providers Qualifications. The Service Providers hereby
each represent and warrant to the Company that the Service Providers are fully
acquainted with the conditions and requirements pertaining to the Services.
The
Service Providers shall maintain, at their own cost and expense, all licenses,
permits, authorizations and approvals necessary to do business and perform
the
Services in the jurisdictions in which the work is performed and otherwise
in
accordance with this Agreement. The Service Providers shall perform the Services
diligently and to the best of their abilities, devoting such time as is
necessary to fully perform the Services.
Page
4
2.5
Warranty.
The
Service Providers hereby warrant and represent to the Company that the Service
Providers are fully qualified and capable of performing the Services and that
the Services shall be performed in a good and workmanlike manner and in
compliance with applicable law.
2.6
Title;
Risk of Loss; Insurance.
Title to
any Acquired Property and any Ordered Rig (regardless of its state of
completion) shall remain with the Company at all times. The Service Providers
shall have all risk of loss of any Acquired Property and any Ordered Rig
(including any Accepted Rig) until delivered in accordance with Section 3.3.
During the Term, the Service Providers shall maintain insurance as required
by
Exhibit B hereto and the cost of such insurance, to the extent applicable to
the
Acquired Property, shall be an Additional Expense. The Company shall be named
as
additional insureds on all policies required to be carried by the Service
Providers hereunder. Within five days after the Effective Date, the Service
Providers shall deliver to the Company certificates evidencing the insurance
coverages required hereunder. Such certificates shall provide that any change
restricting or reducing coverage or the cancellation of any policies under
which
the certificates are issued shall not be valid with respect to the Company’s
interests therein until the Company has received at least 30 days prior written
notice of such change or cancellation. Further, such certificates shall state
that the insurance is primary coverage and not concurrent with or excess over
other valid insurance which may be available to the Company. Should any coverage
subject of any such certificate expire or lapse during the continuance of this
Agreement, the Service Providers shall provide renewal or replacement
certificates of insurance immediately upon the expiration or termination of
any
such coverage. All policies required to be carried by the Service Provider
hereunder shall be endorsed to provide waiver of subrogation rights in favor
of
the Company. The Service Providers agree to comply with all terms of the
insurance contracts required to be maintained by it in Exhibit B
hereto.
2.7
Waiver ofLiens. The Service Providers
acknowledge and agree that the Acquired Property is the property of the Company.
Each of the Service Providers hereby waive, release and discharge the Acquired
Property from any and all liens and charges of every character and however
arising that either of the Service Providers may now or hereafter have against
the Acquired Property or any Ordered Rig for labor, materials and/or services
(including the Services) furnished pursuant to this Agreement or otherwise.
It
is the intention of the Service Providers to relinquish and release to the
Company the Acquired Property (whether as an Accepted Rig or otherwise) free
and
clear of all liens and lien claims of every character that the Service Providers
or any Person acting by, through or under either of the Service Providers may
now or hereafter have against such Acquired Property for labor, materials and/or
services (including the Services) furnished pursuant to this Agreement. The
Service Providers agree and covenant that all laborers and servicemen employed
or to be employed by the Service Providers and any Person acting by, through
or
under either Service Provider, if any, and all costs and expenses for materials
attached to or included in the Acquired Property shall be fully paid and that
no
laborer or servicemen shall have any claim, demand or lien on the Acquired
Property, and that no chattel mortgage, security interest, conditional xxxx
of
sale or retention of title agreement shall be given or executed by the Service
Providers in connection with the Acquired Property or the Services. In
connection with this Section 2.7, each of the Service Providers hereby agrees
execute any waiver of liens or other release of liens as requested by the
Company from time to time.
Page
5
ARTICLE
3
OTHER
OBLIGATIONS
3.1
Acquisition
Costs. The
Service Providers have acquired some of the materials and components for the
Existing Rig Constructions and will acquire all of the materials and components
for each Ordered Rig for and on behalf of the Company (such materials and
components, the “Acquired
Property”).
The
Service Providers have and shall keep detailed and accurate records (including
third-party invoices and expense reports) to reflect the actual costs of the
Acquired Property and the Additional Expenses, and the Service Providers have
or
will forward from time to time copies of such third-party invoices and expense
reports to the Company for payment. The Company has paid or will pay each
relevant third-party for which it has received an invoice in accordance with
this Section 3.1 and, upon such payment, the Company shall be the sole owner
of
the Acquired Property purchased pursuant to such invoice. The Company shall
reimburse the Service Providers for any Additional Expenses for which it has
received an expense report in accordance with this Section 3.1. Upon request,
the Service Providers will identify the physical location of each piece of
Acquired Property within the Service Providers’ care, custody or control and
allow the Company access to such Acquired Property for inspection.
3.2
Acceptance.
Within 10 days of a notice from the Service Providers to the Company that any
Ordered Rig is complete, the Company shall have the right to fully inspect
such
Ordered Rig and reject or accept such Ordered Rig in its reasonable discretion
based upon whether such Ordered Rig was constructed in accordance with the
Design Services and the specifications agreed by the parties for such Ordered
Rig. If the Company determines to accept such Ordered Rig, the Company shall
notify the Service Providers of such acceptance (an “Acceptance
Notice”
and
such
Ordered Rig, an “Accepted
Rig”).
If the
Company determines to reject such Ordered Rig, the Company shall notify the
Service Providers of such rejection, such notice to specify in reasonable detail
the reasons for such rejection.
3.3
Delivery.
For each Accepted Rig, the Service Providers shall deliver such Accepted Rig
to
the Company at the location specified by the Company for such Accepted Rig
(the
“Point
of Delivery”)
and,
upon receipt by the Company at the Point of Delivery, risk of loss of the
Accepted Rig will pass to the Company.
3.4
Access.
The Company may at any time visit the worksite where the Construction Services
are being performed to observe the work of the Service Providers. The Company
may inspect the quality of such work as reasonably requested from time to
time.
Page
6
ARTICLE
4
TERM,
TERMINATION AND RELATED MATTERS
4.1
Term.
The
term
of this Agreement shall commence on the Effective Date and end on the second
anniversary of the Effective Date (the “Initial
Term”)
unless
earlier terminated in accordance with Section 4.2; provided that the term will
be extended to the fourth anniversary of the Effective Date unless written
notice to the contrary is given by the Company to the Service Providers’ at
least 30 days prior to the end of the Initial Term (the Service Providers’
actual period of engagement, whether extending past the Initial Term or
terminated earlier in accordance with this Agreement, is referred to herein
as
the “Term”).
4.2 Termination.
(a)
If at any
time either the Company or the Service Providers (in either case, a
“Defaulting
Party”)
shall
refuse or fail to comply in any material respect with any of its obligations
under this Agreement (a “Material
Default”),
then
the Company (if either or both of the Service Providers are the Defaulting
Party) or the Service Providers (if the Company is the Defaulting Party) (as
applicable, the “Non-Defaulting
Party”)
may
give written notice to the Defaulting Party, and if such Defaulting Party fails
to remedy the Material Default within 30 days after such notice is given, the
Non-Defaulting Party may suspend performance under this Agreement until such
time as the Material Default is cured. The Non-Defaulting Party may terminate
this Agreement for a Material Default by the Defaulting Party under this
Agreement that is not cured within 30 days after suspension of performance
in
accordance with this Section 4.2(a).
(b)
This
Agreement shall terminate automatically either (i) upon Xxxxxxx’x death or (ii)
the failure by Xxxxxxx, by reason of illness, incapacity or other disability,
to
perform his duties or fulfill his obligations under this Agreement in the view
of the Company and as certified in writing by a competent medical physician
chosen by the Company, for a period of 30 consecutive days or a cumulative
period of 180 total days in any 12-month period.
4.3 Effect
of Termination.
If this
Agreement terminates, the rights and obligations of the parties hereunder shall
terminate without any further liability of either party to the other party,
except that the provisions contained in Sections 6, 7 and 8 shall survive any
such termination and except that the liabilities of each party that have accrued
prior to such termination shall remain the liabilities of such party from and
after such termination.
ARTICLE
5
COMPENSATION
AND BONUSES
5.1
Base
Compensation.
During
the Term, the Company shall pay Xxxxxxx gross annual compensation of $200,000
(the “Base
Compensation”). The
Company shall pay the Base Compensation to Xxxxxxx in equal monthly
installments.
5.2
Xxxxxxx.Xx
addition to the Base Compensation due under Section 5.1, for each Accepted
Rig,
the Company shall pay Romfor a rig completion bonus (a “Bonus”)
of both
(a) $650,000 and (b) 100,000 shares of common stock of the Company, in each
case
within 30 days of the date of delivery of
any
Accepted Rig at the Point of Delivery in accordance with Section
3.3.
Page
7
ARTICLE
6
PROTECTION
OF INFORMATION
6.1
Disclosure
to and Property of the Company.
All
information, designs, ideas, concepts, improvements, product developments,
discoveries and inventions, whether patentable or not, that are conceived,
made,
developed or acquired by the Service Providers, individually, collectively
or in
conjunction with others, during the Term that relate to the Company’s business,
products or services (including, without limitation, all such information
relating to the Services) (collectively, “Confidential
Information”)
shall
be disclosed to the Company and are and shall be the sole and exclusive property
of the Company. Moreover, all documents, videotapes, written presentations,
brochures, drawings, memoranda, notes, records, files, correspondence, manuals,
models, specifications, computer programs, e-mail, voice mail, electronic
databases, maps, drawings and all other writings or materials of any type
embodying any of such information, ideas, concepts, improvements, discoveries,
inventions and other similar forms of expression (collectively, “Work
Product”)
are and
shall be the sole and exclusive property of the Company. Upon termination of
this Agreement by the Company, for any reason, the Service Providers promptly
shall deliver such Confidential Information and Work Product, and all copies
thereof to the Company.
6.2
Disclosure
to Service Provider.The
Company may disclose to or place the Service Providers in a position to
have access to or develop
Confidential Information and Work Product of the Company. Subject to
the provisions of this Agreement, the Service Providers agree to preserve and
protect the confidentiality of all Confidential Information or Work Product
of
the Company.
6.3
No
Unauthorized Use or Disclosure.The
Service Providers agree that they will not, at any time during or after the
Term, make any unauthorized disclosure of Confidential Information or Work
Product, or make any use thereof, except in the carrying out of the Services.
The Service
Providers shall use commercially reasonable efforts to cause all Persons to
whom
any Confidential Information shall be disclosed by him hereunder to observe
the
terms and conditions set forth herein as though each such Person was bound
hereby.
6.4
Remedies.The
Service Providers acknowledge that money damages would not be a sufficient
remedy for any breach of this Article 6 by the Service Providers, and the
Company shall be entitled to enforce the provisions of this Article 6 by
terminating payments then owing to the Service Providers under this Agreement
or
otherwise and to specific performance and injunctive relief as remedies for
such
breach or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article, but shall be in addition to all remedies
available at law or in equity, including the recovery of damages from the
Service Providers and their agents.
Page
8
ARTICLE 7
MISCELLANEOUS
7.1
Notices.
For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been duly given when
personally delivered or delivered by facsimile during business hours or when
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
| If to the Company to: |
Standard
Drilling, Inc.
0000
X Xxxxxx XX, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Facsimile
No.: 000-000-0000
Attention:
Xxxxxxx X. Xxxxxxxxx, Xx. Chairman
|
| If to the Service Providers to: | Xxxxxx
Xxxxxxx
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
|
or
to such
other address as either the Company or the Service Providers may furnish to
the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
7.2
Applicable
Law. This
Agreement is entered into under, and shall be governed for all purposes by,
the
laws of the State of Texas.
7.3
No
Xxxxxx.Xx
failure
by either party hereto at any time to give notice of any breach by the other
party of, or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
7.4
Xxxxxxxxxxxx.Xx
the
extent permitted by applicable law, the Company and the Service Providers hereby
agree that any term or provision of this Agreement that renders such term or
provision or any other term or provision hereof invalid or unenforceable in
any
respect shall be modified to the extent necessary to avoid rendering such term
or provision invalid or unenforceable, and such modification shall be
accomplished in the manner that most nearly preserves the benefit of the Company
and the Service Providers bargain hereunder. If a court of competent
jurisdiction determines that any term or provision of this Agreement is invalid
or unenforceable, then the invalidity or unenforceability of that term or
provision shall not affect the validity or enforceability of any other term
or
provision of this Agreement, and all other terms or provisions shall remain
in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in a materially adverse manner
with respect to either party.
Page
9
7.5
Counterparts.This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together will constitute one and
the
same Agreement.
7.6
Headings.The
section headings have been inserted for purposes of convenience and shall not
be
used for interpretive purposes.
7.7
Assignment.This
Agreement shall be binding upon and inure to the benefit of the Company and
any
successor of the Company. This Agreement and the rights and obligations of
the
parties hereunder are personal and neither this Agreement nor any right, benefit
or obligation of the Service Providers shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law
or
otherwise, without the prior written consent of the Company.
7.8
Amendment;
Entire Agreement.
This
Agreement may not be changed orally but only by an agreement in writing agreed
to and signed by both parties. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, contains all the
covenants, promises, representations, warranties and agreements between the
parties with respect to the engagement of the Service Providers by the Company
and supersedes any and all prior agreements, including employment agreements,
consulting agreements, bonus plans, benefit plans and other compensation or
benefit plans between Xxxxxxx or Romfor and the Company.
7.9
Arbitration.
(a) The
parties shall use their reasonable efforts to resolve disputes arising out
of
this Agreement on an amicable basis. If any such dispute remains unresolved
after such period of 30 days, then the matter shall forthwith be referred to
arbitration pursuant to the terms of Section 7.9(b).
(b) To
resolve
a dispute that has not been resolved under Section 7.9(a), the matter shall
be
referred either by the Service Providers or the Company (in either case, the
“Claimant”)
to
arbitration by one arbitrator pursuant to the Rules of Commercial Arbitration
(the “Rules”).
The
Claimant shall file a request for arbitration with the American Arbitration
Association (“AAA”)
and
notify the other party (the “Respondent”)
in
writing of the nature of the dispute. The arbitrator shall be appointed by
the
AAA in accordance with the Rules. Following the selection of the arbitrator
as
set forth above, the arbitration shall be conducted promptly and expeditiously
so as to enable the arbitrator to render a decision within 30 days. Subject
to
the foregoing and except to the extent the parties shall agree to the contrary,
the arbitrator hearing the dispute shall apply and follow the Federal Rules
of
Civil Procedure and the Federal Rules of Evidence. If there is any conflict
between the Rules and this Section 7.9, this Section 7.9 shall govern. The
arbitration shall be held in Houston, Texas. The parties acknowledge that the
arbitrator shall have the authority to grant equitable remedies, if
appropriate.
(c) Arbitration
under this Section 7.9 shall be the exclusive means for a party to seek
resolution of any dispute arising out of, or any breach or alleged breach of,
this Agreement, except that any party may bring an action before a competent
court for the adoption of provisional or protective measures or equitable
relief. The award of the arbitrator shall be final and binding on the parties.
Each of the Claimant and the Respondent shall bear (i) in equal proportions
the
cost and expenses of the arbitration proceeding assessed by the AAA, and (ii)
their respective expenses in prosecuting or defending the
arbitration.
Page
10
(d) Judgment
on the arbitral award rendered may be entered in any court having jurisdiction
or application may be made to such for a judicial acceptance of the award and
an
order of enforcement, as the case may be. The parties acknowledge and agree
that
any party may seek before any court of competent jurisdiction, provisional,
protective or equitable relief.
7.10
Existing
Rigs. The
parties acknowledge that the Existing Rig Constructions were initiated but
not
completed prior to the Effective Date and agree that the Existing Rig
Constructions are hereby deemed to be Ordered Rigs for all purposes under this
Agreement. Any services provided by the Service Providers with respect to such
Existing Rig Constructions shall be deemed to be the relevant Service to be
provided under this Agreement. From and after the Effective Date, the parties
rights and obligations with respect to the Existing Rig Constructions are
governed by this Agreement and any prior agreement, oral or written, between
or
among the parties with respect to such Existing Rig Constructions is hereby
terminated.
7.11
Limitations
of Liability.
The
Service Providers shall be responsible for and shall release, defend, protect,
indemnify and hold harmless the Company and its affiliates, officers, employees
and representatives (the “Company
Group”)
from
and against any and all Claims with respect to either Service Provider’s breach
of this Agreement or with respect to injury, illness or death of, or damage
to
or loss of property, equipment, tools, or materials of, the Service Providers
and their employees, agents or representatives, arising out of or in any way
connected with the performance of the Services or this Agreement, REGARDLESS
OF
WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE
OR
OTHER FAULT OR STRICT LIABILITY OF ANY OF THE COMPANY GROUP, but excluding,
with
respect to a given member of the Company Group, if caused by the intentional
misconduct of such member of the Company Group.
7.12
Custodial
Responsibility for the Company’s Property.The
Service Providers shall be responsible for and shall release, defend, protect,
indemnify and hold harmless the Company Group from and against any and all
Claims with respect to damage, destruction or loss of property, equipment,
tools
or materials of the Company Group (including Acquired Property) that the Service
Providers have taken possession of, or have assumed risk of loss or exercised
custody or control over, in connection with the performance of the Services
or
this Agreement, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE OR OTHER FAULT OR STRICT LIABILITY OF ANY OF
THE
COMPANY GROUP; but excluding, with respect to a given member of the Company
Group, if caused by the intentional misconduct of such member of the Company
Group.
Page
11
7.13
Third
Persons and Property.The
Service Providers shall be responsible for and shall release, defend, protect,
indemnify and hold harmless the Company Group from and against any and all
Claims with respect to injury, illness or death of, or damage to or loss of
property, equipment, tools, or materials of, any Person in connection with
the
performance of the Services or this Agreement to the extent caused by the
Service Provider’s act or omission.
IN
WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
set forth above, to be effective as of the Effective Date.
| STANDARD DRILLING, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| ROMFOR INTERNATIONAL, LTD | ||
| By: | ||
| Name: | ||
| Title: | ||
| XXXXXX XXXXXXX | ||
Page
12
EXHIBIT
A
EXISTING
RIG CONSTRUCTIONS
Rig
# 1 Inventory
For
Depths of 8,000 to 12,000 ft.
| DRAWWORKS: | Electrohoist II drawworks rated at 1200 HP. Powered by 2 GE 752 traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling line. |
| MAST: | Parco Model SL 136A mast rated at 750,000 lb hook load capacity. 136’ clear height. Six 48” sheaves and one 55” fastline sheave, grooved for 1 3/8” line. API rated maximum static hook load of 750,000 lb with 12 lines strung. |
| SUBSTRUCTURE: | Parco Model SL 136A substructure with drill floor height of 21’, width of 27’ 6” and clear cellar span of 15’6”. Rated at 638,000 lb casing capacity and 487,000 lb setback capacity. |
| BLOCK: | 400 ton Upetrom block |
| HOOK: | 400 ton Upetrom hook |
| SWIVEL: | 400 ton Upetrom swivel |
| ROTARY TABLE: | 27 ½” Chinese Ideco rotary table independently powered by 1 - GE 752 traction motor (1,000 hp) |
| XXXXX: | 5 ¼” hex Xxxxx, Varco Model 27 HDP pin drive, 3 1/2'’ x 55’ Taurus hose |
| MUD PUMPS: |
1
-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently
powered by
2 - GE 752 traction motors (1,000 hp each)
1
-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently
powered by
2 - GE 752 traction motors (1,000 hp each)
|
| MUD SYSTEM: | 1000 bbl, 2 tank system consisting of: |
| Shaker tank: 500 bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Xxxxxx 2 x 10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit degasser, poor boy degasser. | |
| Suction tank: 500 bbl, 3 runner skid mud tank with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp agitators. | |
| BOP EQUIPMENT |
1
-
13 5/8” x 5,000 psi Xxxxxxx spherical
1
-
13 5/8” x 5,000 psi Cameron type U double
1
-
13 5/8” x 5,000 psi Cameron type U
single
|
| CLOSING UNIT: |
Koomey
6 station closing unit, 190 gallon
c/w
1 electric and two air pumps, with remote
|
| CHOKE MANIFOLD: |
1
-
3 1/16”, 5,000 psi manual choke
1
-
3 1/16”, 5,000 psi hydraulic choke
|
| SCR: | I.E.C. Systems SCR with 3 Model 0000 XXX xxxxx cubicles and one engine/generator power control system for 4 power units. |
| POWER GENERATION: | 3 Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw) |
| COMPRESSORS | 2 - Xxxxxxx Denver 40 hp electric screw type compressors |
| DRILL PIPE: | 12,000 ft of 4 ½”” Grade E and G |
| DRILL COLLARS: | 16 - 8” drill collars, 21 - 6” drill collars |
| INSTRUMENTATION: |
5
pen drilling recorder
Totco
deviation recording tool
|
| HANDLING TOOLS: | All handling tools for 4 ½” drill pipe, 6” and 8” drill collars |
| ROTARY TONGS: | BJ Type “B” rotary tongs, 3 ½” to 13 3/8” |
| WINCHES: | 2 - 10,000 lbs capacity drill floor winches |
| OTHER EQUIPMENT: | Fuel tank (8,000 gallons) with 2 transfer pumps and filter system, water tank with 2 centrifugal pumps, xxxxx xxxxxxx, pipe spinner, full rig lighting, upper dog house, mechanic shop |
Page
2
Rig
# 2 Inventory
For
Depths of 8,000 to 12,000 ft.
| DRAWWORKS: | Electrohoist II drawworks rated at 1200 HP. Powered by 2 GE 752 traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling line. |
| MAST: | Parco Model SL 136A mast rated at 750,000 lb hook load capacity. 136’ clear height. Six 48” sheaves and one 55” fastline sheave, grooved for 1 3/8” line. API rated maximum static hook load of 750,000 lb with 12 lines strung. |
| SUBSTRUCTURE: | Parco Model SL 136A substructure with drill floor height of 21’, width of 27’ 6” and clear cellar span of 15’6”. Rated at 638,000 lb casing capacity and 487,000 lb setback capacity. |
| BLOCK: | 400 ton Upetrom block |
| HOOK: | 400 ton Upetrom hook |
| SWIVEL: | 400 ton Upetrom swivel |
| ROTARY TABLE: | 27 ½” Chinese Ideco rotary table independently powered by 1 - GE 752 traction motor (1,000 hp) |
| XXXXX: | 5 ¼” hex Xxxxx, Varco Model 27 HDP pin drive, 3 1/2'’ x 55’ Taurus hose |
| MUD PUMPS: |
1
-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered
by
2 - GE 752 traction motors (1,000 hp each)
1
-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered
by
2 - GE 752 traction motors (1,000 hp each)
|
| MUD SYSTEM: | 1000 bbl, 2 tank system consisting of: |
| Shaker tank: 500 bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Xxxxxx 2 x 10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit degasser, poor boy degasser. | |
| Suction tank: 500 bbl, 3 runner skid mud tank with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp agitators. | |
| BOP EQUIPMENT |
1
-
13 5/8” x 5,000 psi Xxxxxxx spherical
1 - 13 5/8” x 5,000 psi Cameron type U double 1
-
13 5/8” x 5,000 psi Cameron type U single
|
| CLOSING UNIT: |
Koomey
6 station closing unit, 190 gallon
c/w
1 electric and two air pumps, with
remote
|
Page
3
| CHOKE MANIFOLD: |
1
-
3 1/16”, 5,000 psi manual choke
1
-
3 1/16”, 5,000 psi hydraulic choke
|
| SCR: | I.E.C. Systems SCR with 3 Model 0000 XXX xxxxx cubicles and one engine/generator power control system for 4 power units. |
| POWER GENERATION: | 3 Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw) |
| COMPRESSORS | 2 - Xxxxxxx Denver 40 hp electric screw type compressors |
| DRILL PIPE: | 12,000 ft of 4 ½”” Grade E and G |
| DRILL COLLARS: | 16 - 8” drill collars, 21 - 6” drill collars |
| INSTRUMENTATION: |
5
pen drilling recorder
Totco
deviation recording tool
|
| HANDLING TOOLS: | All handling tools for 4 ½” drill pipe, 6” and 8” drill collars |
| ROTARY TONGS: | BJ Type “B” rotary tongs, 3 ½” to 13 3/8” |
| WINCHES: | 2 - 10,000 lbs capacity drill floor winches |
| OTHER EQUIPMENT: | Fuel tank (8,000 gallons) with 2 transfer pumps and filter system, water tank with 2 centrifugal pumps, xxxxx xxxxxxx, pipe spinner, full rig lighting, upper dog house, mechanic shop |
Page
4
Rig
# 3 Inventory
For
Depths of 10,000 to 15,000 ft.
| DRAWWORKS: | Electrohoist II drawworks rated at 1500 HP. Powered by 2 GE 752 traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling line. |
| MAST: | Parco Model SL 142A mast rated at 1,050,000 lb hook load capacity. 142’ clear height. Six 60” sheaves and one 60” fastline sheave, grooved for 1 3/8” line. API rated maximum static hook load of 1,050,000 lb with 12 lines strung. |
| SUBSTRUCTURE: | Parco Model SL 142A substructure with drill floor height of 28’, width of 29’ 6” and clear cellar span of 19’ 6”. Rated at 1,050,000 lb casing capacity and 682,500 lb setback capacity. |
| BLOCK: | 500 ton Upetrom block |
| HOOK: | 500 ton Upetrom hook |
| SWIVEL: | 500 ton Upetrom swivel |
| ROTARY TABLE: | 27 ½” Chinese Ideco rotary table independently powered by 1 - GE 752 traction motor (1,000 hp) |
| XXXXX: | 5 ¼” hex Xxxxx, Varco Model 27 HDP pin drive, 3 1/2'’ x 55’ Taurus hose |
| MUD PUMPS: |
1
-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered
by
2 - GE 752 traction motors (1,000 hp each)
1-
Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered
by
2 - GE 752 traction motors (1,000 hp each)
|
| MUD SYSTEM: | 1000 bbl, 2 tank system consisting of: |
| Shaker tank: 500 bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Xxxxxx 2 x 10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit degasser, poor boy degasser. | |
| Suction tank: 500 bbl, 3 runner skid mud tank with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp agitators. | |
| BOP EQUIPMENT |
1
-
13 5/8” x 5,000 psi Xxxxxxx spherical
1
-
13 5/8” x 5,000 psi Cameron type U double
1
-
13 5/8” x 5,000 psi Cameron type U single
|
| CLOSING UNIT: |
Koomey
6 station closing unit, 190 gallon
c/w
1 electric and two air pumps, with
remote
|
Page
5
| CHOKE MANIFOLD: | 1
-
3 1/16”, 5,000 psi manual choke
1
-
3 1/16”, 5,000 psi hydraulic choke
|
| SCR: | I.E.C. Systems SCR with 3 Model 0000 XXX xxxxx cubicles and one engine/generator power control system for 4 power units. |
| POWER GENERATION: | 3 Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw) |
| COMPRESSORS | 2 - Xxxxxxx Denver 40 hp electric screw type compressors |
| DRILL PIPE: | 14,000 ft of 5” Grade E and G |
| DRILL COLLARS: | 16 - 8” drill collars, 21 - 6” drill collars |
| INSTRUMENTATION: | 5
pen drilling recorder
Totco
deviation recording tool
|
| HANDLING TOOLS: | All handling tools for 5” drill pipe, 6” and 8” drill collars |
| ROTARY TONGS: | BJ Type “B” rotary tongs, 3 ½” to 13 3/8” |
| WINCHES: | 2 - 10,000 lbs capacity drill floor winches |
| OTHER EQUIPMENT: | Fuel tank (8,000 gallons) with 2 transfer pumps and filter system, water tank with 2 centrifugal pumps, xxxxx xxxxxxx, pipe spinner, full rig lighting, upper dog house, mechanic shop |
Page
6
EXHIBIT
B
INSURANCE
REQUIREMENTS
Page
7
