CONFORMED COPY
PRIVATE & CONFIDENTIAL
DATED 8th December 1998
GLOBAL MARINE INC.
as Guarantor
and
BMBF (NO.12) LIMITED
as Lessor
DEED OF
GUARANTEE AND INDEMNITY
relating to
Global Marine International Drilling Corporation
and a Glomar Hull 456 class Deepwater Drillship with
Xxxxxxx and Xxxxx xxxx number 1740
Schedule Number: 52/5050 5371-3
LIST OF CONTENTS
Clause Title Page Number
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 5
2. GUARANTEE AND INDEMNITY 6
3. DEMANDS AND CERTIFICATES 7
4. TIME AND INDULGENCE 8
5. CONTINUING SECURITY 9
6. NO COMPETITION 9
7. GUARANTOR'S OBLIGATIONS 10
8. REPRESENTATIONS AND WARRANTIES 10
9. COVENANTS 13
10. PAYMENTS AND TAXES 17
10.1 Payments 17
11. ADDITIONAL SECURITY 19
12. ACKNOWLEDGEMENT AND DECLARATION 19
13. ASSIGNMENT 20
13.1 Assignment by Lessor 20
13.2 Assignment by Xxxxxxxxx 00
00. COSTS AND EXPENSES 21
15. MISCELLANEOUS 21
15.1 Delay in Enforcement, Waivers etc. 21
15.2 Variation 21
15.3 Invalidity 21
15.4 Notices 22
15.5 Applicable Law 22
15.6 Counterparts 22
15.7 Further Assurances 23
15.8 Entire Agreement 23
16. SUBMISSION TO JURISDICTION 23
17. JUDGMENT CURRENCY 24
18. NATURE OF DOCUMENT 24
THIS GUARANTEE AND INDEMNITY dated 8th December 1998 is made
BETWEEN:
(1) GLOBAL MARINE INC., a company incorporated under the laws of
the State of Delaware in the United States of America and
having its principal place of business at 000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx of America (the
"GUARANTOR"); and
(2) BMBF (No.12) limited, a company incorporated under the laws
of England and Wales with company registration number
2512609 whose registered office is at Xxxxxxxxx Xxxxx,
Xxxxxxxxx Xxx, Xxxxxxxxxxx, Xxxxxxxxx XX00 0XX, England
(the "LESSOR").
WHEREAS:
(A) Pursuant to the Novation Agreement and the Head Lease, the
Lessor has agreed, inter alia, to purchase the Vessel from
the Builder and lease the same to the Lessee subject to the
terms and conditions therein contained.
(B) The Guarantor desires the Lessor to purchase the Vessel from
the Builder, to lease the same to the Lessee, for the
purposes of the Lessee sub-chartering the same to the Sub-
Lessee and the Sub-Lessee entering into the Exxon Contract
with the Exxon Party, and to enter into the Lease Documents
to which the Lessor is or is to be a party.
(C) The Lessee and the other Primary Obligors are wholly owned
Subsidiaries (US) of the Guarantor.
(D) It is a condition precedent to the obligations of the Lessor
under the Head Lease that the Guarantor executes and
delivers this Guarantee and Indemnity to the Lessor.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
Save as otherwise expressly provided herein, words and
expressions used in this Guarantee and Indemnity shall have
the meanings, if any, respectively attributed thereto in the
Head Lease. In this Guarantee and Indemnity (including the
Recitals) the following words and expressions shall have the
meanings respectively attributed to them below:
"ATTRIBUTABLE INDEBTEDNESS" when used with respect to any
Sale/Leaseback Transaction, means, as at the time of
determination, the present value (discounted at the rate set
forth or implicit in the terms of the lease included in such
transaction) of the total obligations of the lessee for
rental payments (other than amounts required to be paid on
account of taxes, maintenance, repairs, insurance,
assessments, utilities, operating and labour costs and other
items which do not constitute payments for property rights)
during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which
such lease has been extended). In the case of any lease
which is terminable by the lessee upon the payment of a
penalty, such net amount shall be the lesser of the net
amount determined assuming termination upon the first date
such lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so
terminated) or the net amount determined assuming no such
termination;
"ASSET" means every kind of property, asset, interest or
right, including but not limited to any future or contingent
rights to any revenues or other payment which would, in
accordance with GAAP consistently applied, be classified as
assets on that day;
"BOARD OF DIRECTORS" means the Board of Directors of the
Guarantor or any committee thereof duly authorised, with
respect to any particular matter, to act by or on behalf of
the Board of Directors of the Guarantor;
"BOARD RESOLUTION" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Guarantor to
have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification,
and delivered to the Lessor;
"CAPITALISED LEASE OBLIGATION" of any person means any
obligation of such person to pay rent or other amounts under
a lease of property, real or personal, that is required to
be capitalised for financial reporting purposes in
accordance with GAAP; and the amount of such obligation
shall be the capitalised amount thereof determined in
accordance with GAAP;
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of
assets (less applicable reserves and other properly
deductible items) after deducting (i) all current
liabilities (excluding the amount of those which are by
their terms extendible or renewable at the option of the
obligor to a date more than twelve (12) months after the
date as of which the amount is being determined and current
maturities of long-term debt) and (ii) all goodwill,
tradenames, trademarks, patents, unamortised debt discount
and expense and other like intangible assets, all as set
forth on the most recent quarterly balance sheet of the
Guarantor and its consolidated subsidiaries and determined
in accordance with GAAP;
"EMCUMBRANCE" means any mortgage, pledge, lien, charge
(whether fixed or floating), assignment, hypothecation,
security interest, title retention, preferential right or
trust arrangement and any other security agreement or
arrangement;
"FUNDED INDEBTEDNESS" means all Indebtedness (including
Indebtedness incurred under any revolving credit, letter of
credit or working capital facility) that matures by its
terms, or that is renewable at the option of any obligor
thereon to a date more than one year after the date on which
such Indebtedness is originally incurred;
"GAAP" means generally accepted accounting principles in the
United States of America set forth in the opinions and
pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the
accounting profession of the United States of America, as in
effect from time to time;
"GROUP" means the Guarantor and its Subsidiaries (US) from
time to time;
"GUARANTEED AGREEMENTS" means each of the Lease Documents to
which the Lessor and the Lessee and/or any other Primary
Obligor is a party;
"GUARANTEED OBLIGATIONS" means any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether arising
in respect of or attributable to the period prior to the
date of this Guarantee and Indemnity or to any time
hereafter whether or not for the payment of money, and
including, without limitation, any obligation or liability
to pay damages and including any interest which, but for the
application of bankruptcy or insolvency laws, would have
accrued on the amounts in question) which are now or which
may at any time and from time to time hereafter be due,
owing, payable or incurred or be expressed to be due, owing,
payable or incurred from or by the Lessee and/or any other
Primary Obligor to the Lessor under or in connection with
the Guaranteed Agreements and references to "GUARANTEED
OBLIGATIONS" include references to any part thereof;
"HEAD LEASE" means the lease in respect of the Vessel
entered or to be entered into between the Lessor and the
Lessee;
"INDEBTEDNESS" of any person means, without duplication, (i)
all indebtedness of such person for borrowed money (whether
or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii)
all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such person in respect of letters of credit
or other similar instruments (or reimbursement obligations
with respect thereto), other than standby letters of credit,
performance bonds and other obligations issued by or for the
account of such person in the ordinary course of business,
to the extent not drawn or, to the extent drawn, if such
drawing is reimbursed not later than the third Business Day
following demand for reimbursement, (iv) all obligations of
such person to pay the deferred and unpaid purchase price of
property or services, except trade payables and accrued
expenses incurred in the ordinary course of business, (v)
all Capitalised Lease Obligations of such person, (vi) all
Indebtedness of others secured by a Lien on any asset of
such person, whether or not such Indebtedness is assumed by
such person (provided that if the obligations so secured
have not been assumed in full by such person or are not
otherwise such person's legal liability in full, then such
obligations shall be deemed to be in an amount equal to the
greater of (a) the lesser of (1) the full amount of such
obligations and (2) the fair market value of such assets, as
determined in good faith by the board of directors of such
person, which determination shall be evidenced by a board
resolution, and (b) the amount of obligations as have been
assumed by such person or which are otherwise such person's
legal liability), and (vii) all Indebtedness of others
(other than endorsements in the ordinary course of business)
guaranteed by such person to the extent of such guarantee;
"JOINT VENTURE" means (1) with respect to properties located
in the United States of America, any partnership,
corporation or other entity, in which up to and including 50
percent. (50%) of the partnership interests, outstanding
voting stock or other equity interests is owned, directly or
indirectly, by the Guarantor and/or one or more Subsidiaries
(US), and (2) with respect to properties located outside the
United States of America, any partnership, corporation or
other entity, in which up to and including 60 percent. (60%)
of the partnership interests, outstanding voting stock or
other equity interests is owned, directly or indirectly, by
the Guarantor and/or one or more Subsidiaries (US). A Joint
Venture shall not be a Subsidiary (US);
"LESSEE" means Global Marine International Drilling
Corporation, a company incorporated under the laws of the
Bahamas and having its registered office at x/x XxXxxxxx,
Xxxxxxxx & Xxxxxx, Xxxxxx House, 0 Xxxxxx Xxxxxx, XX Xxx Xx.
0000, Nassau, Bahamas;
"LIABILITY" means a liability, loss, charge, claim,
proceeding, damage, judgment, enforcement, penalty, fine,
fee, cost and expense of whatsoever nature;
"LIEN" means any mortgage, pledge, lien, encumbrance, charge
or security interest. For purposes of this Guarantee and
Indemnity, the Guarantor or any Subsidiary (US) of the
Guarantor shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement,
Capitalised Lease Obligation or other title retention
agreement relating to such asset;
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the
Guarantor, whether outstanding on the date of this Guarantee
and Indemnity or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such
Indebtedness shall be subordinated in right of payment to
the obligations of the Guarantor under this Guarantee and
Indemnity;
"PERMITTED LIENS" shall mean (i) Liens existing on the date
of this Guarantee and Indemnity, (ii) Liens on property or
assets of, or any shares of stock of, or other equity
interests in, or indebtedness of, any person existing at the
time such person becomes a Subsidiary (US) of the Guarantor
or at the time such person is merged into or consolidated
with the Guarantor or any of its Subsidiaries (US) or at the
time of a sale, lease or other disposition of the properties
of a person (or a division thereof) as an entirety or
substantially as an entirety to the Guarantor or a
Subsidiary (US); (iii) Liens in favour of the Guarantor or
any of its Subsidiaries (US); (iv) Liens in favour of
governmental bodies to secure progress or advance payments;
(v) Liens securing industrial revenue or pollution control
bonds; (vi) Liens on assets existing at the time of
acquisition thereof, securing all or any portion of the cost
of acquiring, constructing, improving, developing or
expanding such assets or securing Indebtedness incurred
prior to, at the time of, or within twenty-four (24) months
after, the later of the acquisition, the completion of
construction, improvement, development or expansion or the
commencement of commercial operation of such assets, for the
purpose of (a) financing all or any part of the purchase
price of such assets or (b) financing all or any part of the
cost of construction, improvement, development or expansion
of any such assets; (vii) statutory liens or landlords',
carriers', warehouseman's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by
appropriate proceedings; (viii) Liens on current assets of
the Guarantor or any Subsidiary (US) securing Indebtedness
of the Guarantor or such Subsidiary (US), respectively (ix)
Liens on the stock, partnership or other equity interest of
the Guarantor or any Subsidiary (US) in any Joint Venture or
any Subsidiary (US) that owns an equity interest in such
Joint Venture to secure Indebtedness, provided the amount of
such Indebtedness is contributed and/or advanced solely to
such Joint Venture; and (x) any extensions, substitutions,
replacements or renewals in whole or in part of a Lien
enumerated in clauses (i) through (ix) above;
"PRINCIPAL PROPERTY" means any drilling rig or drillship, or
integral portion thereof, owned or leased by the Guarantor
or any Subsidiary (US) and used for drilling offshore oil
and gas xxxxx, which, in the opinion of the board of
directors, is of material importance to the business of the
Guarantor and its Subsidiaries (US) taken as a whole, but no
such drilling rig or drillship, or portion hereof, shall be
deemed of material importance if its net book value (after
deducting accumulated depreciation) is less than two
percent. (2%) of Consolidated Net Tangible Assets;
"PRIMARY OBLIGOR" means each member of the Guarantor's Group
(other than the Guarantor) which is a party to any Lease
Document, including in any event the Lessee, the Sub-Lessee
and, prior to the Delivery Date, the Option Party;
"SALE/LEASEBACK TRANSACTION" means any arrangement with any
person pursuant to which the Guarantor or any Subsidiary
(US) leases any Principal Property that has been or is to be
sold or transferred by the Guarantor or the Subsidiary (US)
to such person, other than (1) temporary leases for the
term, including renewals at the option of the lessee, of not
more than five years, (2) leases between the Guarantor and
a Subsidiary (US) or between Subsidiaries (US), (3) leases
of Principal Property executed by the time of, or within 12
months after the latest of, the acquisition, the completion
of construction or improvement, or the commencement of
commercial operation of the Principal Property, and (4)
arrangements pursuant to any provision of law with an effect
similar to the former Section 168(f)(8) of the Internal
Revenue Code of 1954;
"VESSEL" means the Glomar class 456 ultra-deepwater
drillship to be constructed by the Shipbuilder pursuant to
the Shipbuilding Contract under hull number 1740 and to be
registered on or prior to the Delivery Date in the name of
the Lessor under the Panamanian flag under the name "GLOMAR
IRISH SEA I" (further details of which are set out in the
Head Lease);
"VESSEL SYSTEMS" shall have the meaning given thereto in
Clause 8.1.15; and
"YEAR 2000 ISSUE" means the failure of computer software,
hardware and firmware systems and equipment containing
embedded computer chips to properly receive, transmit,
process, manipulate, store, retrieve, re-transmit or in any
other way utilise data and information due to the occurrence
of the year 2000 or the inclusion of dates on or after 1
January, 2000.
1.2 INTERPRETATION
(A) In this Guarantee and Indemnity references to:
(i) clauses, paragraphs, sub-paragraphs, or the
schedule are, unless otherwise specified,
references to clauses, paragraphs, sub-
paragraphs of, and the schedule to, this
Guarantee and Indemnity as from time to time
amended in accordance with the provisions of
this Guarantee and Indemnity;
(ii) any statute or other legislative provisions
shall, unless otherwise specified, be read to
include any statutory or legislative
modification or re-enactment thereof, or
substitution therefor;
(iii) this Guarantee and Indemnity or any other
agreement or instrument shall include this
Guarantee and Indemnity or such other
agreement or instrument as it may from time to
time be amended, novated, supplemented or
substituted with the agreement of the parties
hereto or thereto as the case may be;
(iv) "PERSON" means any individual, corporation,
partnership, limited liability company, joint
venture, incorporated or unincorporated
association, joint stock company, trust,
unincorporated organisation or government or
other agency or political subdivision thereof
or other entity of any kind;
(v) "ASSIGNEE" of a person shall include any
person who has assumed all or some of the
rights and/or obligations of the relevant
person, whether by assignment, novation or
otherwise;
(vi) reference to any person shall include its
successors (whether of the same name or
another name) and permitted assignees;
(vii) words denoting the singular number shall
include the plural and vice versa;
(viii) the words "OTHER" and "OTHERWISE" shall not be
construed ejusdem generis with any foregoing
words where a wider construction is possible;
(ix) the "WINDING-UP" of a person also includes the
amalgamation, reconstruction, reorganisation,
administration, dissolution, liquidation,
merger or consolidation of that person, and
any equivalent or analogous procedure under
the law of any jurisdiction in which that
person is incorporated, domiciled or resident
or carries on business or has assets; and
(x) the words "INCLUDING" and "IN PARTICULAR"
shall be construed as being by way of
illustration or emphasis only and shall not be
construed as, nor shall they take effect as,
limiting the generality of the foregoing
words.
(B) Clause and other headings are for ease of reference
only and shall not affect the interpretation of this
Guarantee and Indemnity.
2. GUARANTEE AND INDEMNITY
2.1 In consideration of the Lessor, inter alia, entering, and
agreeing to enter, into the Head Lease and the other Lease
Documents to which it is or is to be a party, the Guarantor:
2.1.1 as primary obligor and not as surety only, hereby
unconditionally and irrevocably guarantees to the
Lessor the due and punctual observance and
performance by the Lessee and/or any other Primary
Obligor of each and every one of the Guaranteed
Obligations;
2.1.2 hereby unconditionally and irrevocably covenants with
and undertakes with the Lessor that in the event of
a default by the Lessee and/or any other Primary
Obligor in the observance or performance for whatever
reason of any of the Guaranteed Obligations, as and
when the same shall be expressed to be due to be
observed or performed, the Guarantor shall forthwith
on demand by the Lessor perform such Guaranteed
Obligation or cause such Guaranteed Obligation to be
performed, punctually as if such Guaranteed
Obligation were performed by the Lessee and/or any
other Primary Obligor; and
2.1.3 hereby irrevocably and unconditionally undertakes,
covenants and agrees with the Lessor as a primary
obligation to indemnify the Lessor and keep the
Lessor indemnified on demand and on a full indemnity
basis for and against any and all Liabilities
incurred or sustained by the Lessor in relation to
and arising out of the failure of the Lessee and/or
any other Primary Obligor duly and punctually to
perform the Guaranteed Obligations.
2.2 As a separate and alternative stipulation in addition to its
liabilities in Clause 2.1, the Guarantor hereby
unconditionally and irrevocably agrees with the Lessor that
any of the Guaranteed Obligations which is expressed to be
performed by the Lessee and/or any other Primary Obligor but
which may not be recoverable from the Guarantor on the
footing of a guarantee (whether by reason of the dissolution
of the Lessee and/or any other Primary Obligor or any
reconstruction or amalgamation in which or as a consequence
of which the Lessee and/or any other Primary Obligor loses
its respective separate corporate identity or any other fact
or circumstance whatsoever and whether or not known or
becoming known to the Lessor) shall nevertheless be
recoverable from the Guarantor as if it were the principal
debtor.
2.3 In addition to its liabilities under Clauses 2.1 and 2.2
above the Guarantor shall pay or cause to be paid to the
Lessor on demand interest at the Default Rate (both before
and after judgment) accruing on a day to day basis, and on
the basis of a 365 day year (or a 360 day year when the
amount in respect of which Default Interest is payable under
this Clause 2.3 is denominated in a currency where it is
customary for banks or financial institutions to calculate
interest on such a basis), on each amount (or any part
thereof) for the time being due to the Lessor under this
Guarantee and Indemnity and unpaid from the date of demand
on the Guarantor for payment until payment is made (but
excluding the day on which value for any payment made is
received by the Lessor).
2.4 the Guarantor hereby agrees that for the purposes of this
Guarantee and Indemnity, service by the Lessor on the Lessee
of a Termination Notice shall constitute a valid and
effective service of such notice and the Lessee shall be
conclusively deemed to have become liable to make the
payments expressed in Clause 21.5 of the Head Lease to be
payable by the Lessee to the Lessor upon service of such
notice, notwithstanding that, as between the Lessee and the
Lessor, the Lessor is, by virtue of any laws of England and
Wales or any other applicable jurisdiction, relating to
bankruptcy, insolvency or administration or any similar
laws, prohibited from serving such notice, repossessing the
Vessel or commencing or continuing any proceedings or other
legal process in England and Wales or such other
jurisdiction against the Lessee would not be effective
according to its terms.
3. DEMANDS AND CERTIFICATES
3.1 In order to make any demand under this Guarantee and
Indemnity the Lessor shall serve upon the Guarantor a notice
in writing.
3.2 Any certificate from any director, officer or authorised
person of the Lessor or any agent of the Lessor contained in
any demand, notice or other communication given or made by
the Lessor under this Guarantee and Indemnity in relation to
the amount of the Guarantor's liability in relation to the
Guaranteed Obligations or any other amount payable by the
Guarantor under this Guarantee and Indemnity shall be prima
facie evidence that the facts stated in such certificate are
true and correct.
3.3 The Guarantor acknowledges and agrees with the Lessor that,
whenever the Lessor cannot reasonably ascertain with
certainty the amount of any liability of the Lessee and/or
any other Primary Obligor to the Lessor under any of the
Guaranteed Agreements, the Lessor may make demand on the
Lessee and/or any other Primary Obligor on the basis of a
provisional estimate thereof by the Lessor, and if any such
demand is not satisfied in full the Lessor may make demand
on the Guarantor under this Guarantee and Indemnity in
accordance with and subject to Clause 2 for the sum so
demanded from the Lessee and/or any other Primary Obligor.
Without prejudice to Clauses 2 and 3.2, the Guarantor agrees
that no such demand on the Guarantor shall be vitiated or
invalidated if it subsequently transpires that the amount
demanded from the Lessee, any other Primary Obligor or the
Guarantor was less than or greater than the amount which was
properly due. If it subsequently transpires that an amount
(including interest) paid by the Guarantor was greater than
the amount which was properly due from the Guarantor, the
Lessor shall refund the excess to the Guarantor together
with an amount equal to interest at Base Rate on the excess
from the date paid to the date refunded.
3.4 Without prejudice to Clauses 3.1, 3.2 and 3.3 the Lessor may
at any time and from time to time issue further or corrected
demands on the Guarantor in respect of any Guaranteed
Obligation.
4. TIME AND INDULGENCE
4.1 The Lessor shall be at liberty at all times and from time to
time, whether before or after any demand for payment under
this Guarantee and Indemnity and without discharging or in
any way affecting the Guarantor's liability hereunder, to do
all or any of the following:
4.1.1 terminate, amend or novate or agree to the
termination, amendment or novation (in accordance
with the terms of the Guaranteed Agreements) any of
the Guaranteed Agreements in any manner whatsoever;
4.1.2 grant to the Lessee, any other Primary Obligor or to
any other person any time or indulgence;
4.1.3 terminate or cancel the Shipbuilding Contract and/or
the purchase of the Vessel thereunder;
4.1.4 deal with, exchange, renew, vary, release, modify or
abstain from perfecting or enforcing any securities,
guarantees or rights which the Lessor may now or
hereafter have from or against the Lessee, any other
Primary Obligor or any other person in respect of the
respective obligations of the Lessee, any other
Primary Obligor or such other person under or in
respect of the Guaranteed Agreements or the
transactions contemplated thereby;
4.1.5 compound with, discharge or vary the liability of the
Lessee, any other Primary Obligor or any other person
or guarantor to the Lessee and/or any other Primary
Obligor or concur in, accept or vary any compromise,
arrangement or settlement with the Lessee, any other
Primary Obligor or any other person or guarantor or
concur in or vary any deed of arrangement or deed of
assignment for the benefit of creditors of any such
person;
4.1.6 omit to prove or fail to maintain any right of proof
for or to claim or enforce payment of any dividend or
composition; and
4.1.7 take or omit to take any security from the Lessee,
any other Primary Obligor or any other person or
guarantor in respect of the obligations of the Lessee
and/or any other Primary Obligor under or in respect
of the Guaranteed Agreements or the transactions
contemplated thereby whether contemporaneously with
this Guarantee and Indemnity or otherwise.
5. CONTINUING SECURITY
5.1 This Guarantee and Indemnity shall be a continuing security
and accordingly:
5.1.1 shall be binding on the Guarantor and its successors
and assigns;
5.1.2 shall not be discharged by any partial payment by the
Lessee, any other Primary Obligor or any other person
under or in respect of any of the Guaranteed
Agreements;
5.1.3 shall extend to cover the balance due at any time
from the Lessee and/or any other Primary Obligor to
the Lessor under or in respect of the Guaranteed
Agreements or the transactions contemplated thereby;
5.1.4 shall be in addition to and not in substitution for
or derogation of any other security which the Lessor
may at any time hold in respect of the obligations of
the Lessee and/or any other Primary Obligor under or
in respect of the Guaranteed Agreements or the
transactions contemplated thereby;
5.1.5 except to the extent that the Lessor expressly waives
the Guarantor's obligations under this Guarantee and
Indemnity, shall not be discharged or in any way
affected by any action taken or not taken by the
Lessor; and
5.1.6 shall not be discharged or in any way affected by any
merger with any other person or persons or
restructuring of any nature whatsoever of, or any
change of name by, the Lessee and/or any other
Primary Obligor, or the disposal of any interest in
the Lessee and/or any other Primary Obligor (whether
or not the same is consented to, or otherwise
approved by, the Lessor).
6. NO COMPETITION
6.1 From the date or dates upon which any demand is properly
made against the Guarantor under this Guarantee and
Indemnity until such time as the Lessor has received, and is
entitled to retain, payment of the Guaranteed Obligations in
full, the Guarantor shall not:
6.1.1 claim any set-off or counterclaim against the Lessee
and/or any other Primary Obligor in respect of any
payment by the Guarantor hereunder or in respect of
any outstanding actual or contingent liability
between the Guarantor and the Lessee and/or any other
Primary Obligor; or
6.1.2 make or enforce any claim or right (including a right
of subrogation or contribution) against the Lessee
and/or any other Primary Obligor or prove in
competition with the Lessor in the event of the
liquidation of the Lessee and/or any other Primary
Obligor in respect of any payment by the Guarantor
hereunder or in respect of any outstanding actual or
contingent liability between the Guarantor and the
Lessee and/or any other Primary Obligor; or
6.1.3 in competition with the Lessor claim the benefit of
any security or guarantee now or hereafter held by
the Lessor for any money or liabilities due or
incurred by the Lessee and/or any other Primary
Obligor to the Lessor or any share therein.
7. GUARANTOR'S OBLIGATIONS
7.1 The Guarantor's obligations under this Guarantee and
Indemnity are those of primary obligor and exist
irrespective of any total or partial invalidity, illegality
or unenforceability of any of the Guaranteed Agreements.
7.2 The Lessor shall not be obliged before making demand under
or taking steps to enforce this Guarantee and Indemnity:
7.2.1 to take action or obtain judgment against the Lessee,
any other Primary Obligor or any other person in any
court or tribunal; or
7.2.2 to make or file any claim in a bankruptcy or
liquidation of the Lessee, any other Primary Obligor
or any other person; or
7.2.3 to exercise diligence against the Lessee, any other
Primary Obligor or any other person under any of the
Guaranteed Agreements or the transactions
contemplated thereby.
7.3 The Guarantor waives and agrees not to enforce or claim the
benefit of any and all rights it has or may from time to
time have as surety under any applicable law which is or may
be inconsistent with any of the provisions of this Guarantee
and Indemnity.
8. REPRESENTATIONS AND WARRANTIES
8.1 The Guarantor acknowledges that the Lessor has entered into
the Lease Documents in full reliance on representations and
warranties by the Guarantor in the terms set out in this
Clause 8 and the Guarantor now represents and warrants to
the Lessor that the following statements are at the date
hereof true and accurate, namely that:
8.1.1 the Guarantor is a company duly incorporated and
validly existing under the laws of the State of
Delaware in the United States of America and has the
corporate power and authority to own its assets and
carry on its business as it is being presently
conducted and to enter into and perform its
obligations under this Guarantee and Indemnity and to
consummate the transactions contemplated hereby;
8.1.2 the execution, delivery and performance by the
Guarantor of this Guarantee and Indemnity and the
consummation of the transactions contemplated hereby
have been duly authorised by all necessary or
appropriate corporate action on the part of the
Guarantor, do not require any shareholder approval,
or approval or consent of any trustee or holders of
any indebtedness or obligations of the Guarantor
except such as have been duly obtained and are in
full force and effect, and do not contravene or
constitute a default under (aa) any law, governmental
rule, regulation or decree, directive, convention,
treaty, judgment, injunction or any official or
judicial order binding on the Guarantor or any of its
assets, (bb) its constitutional documents or (cc) any
agreement consent or instruments to which it is a
party or is binding upon it or any of its assets nor
result in the creation or imposition of any Lien on
any of its assets pursuant to the provisions of any
such agreement, consent or instrument;
8.1.3 this Guarantee and Indemnity constitutes, or when
executed and delivered will constitute, the legal,
valid and binding obligations of the Guarantor
enforceable in accordance with its terms subject to
general principles of equity and the law affecting
creditors' rights generally;
8.1.4 no authorisation, approval, consent, licence,
exemption, registration, recording, filing or
notarisation and no payment of any duty or tax and no
other action whatsoever which has not been duly and
unconditionally obtained, made or taken is necessary
or desirable to ensure the validity, enforceability
or priority of the liabilities and obligations of the
Guarantor or the rights of the Lessor under this
Guarantee and Indemnity;
8.1.5 no event has occurred which constitutes, or which
with the giving of notice and/or the lapse of time
and/or a relevant determination would constitute a
contravention of, or a default under, any agreement
by which the Guarantor, its business or any of its
assets is bound or affected, being a contravention or
default which would be likely to either have a
material adverse effect on the business, assets or
financial or trading condition of the Guarantor or
materially and adversely affect its ability to
observe or perform its obligations under this
Guarantee and Indemnity;
8.1.6 no litigation, arbitration or administrative
proceedings or claim which would be likely to, by
itself or together with any other such proceedings or
claims, either have a material adverse effect on its
business, assets or financial or trading condition or
materially and adversely affect its ability to
observe or perform its obligations under this
Guarantee and Indemnity is presently in progress or,
to the best of the knowledge, information and belief
of the Guarantor, pending or threatened against the
Guarantor, its business or any of its assets;
8.1.7 No Termination Event has occurred and is continuing;
8.1.8 the Guarantor has not taken any corporate action nor,
to the best of its knowledge and belief, have any
other steps been taken or legal proceedings been
started or threatened against it for its winding up,
dissolution, administration or re-organisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its assets or revenues;
8.1.9 under applicable laws of the State of Delaware and
the federal laws of the United States of America in
force at the date hereof the Guarantor is not
required to deduct any Taxes from any payments that
it may be required to make under this Guarantee and
Indemnity;
8.1.10 the Guarantor is conducting its business in all
material respects in compliance with all applicable
laws, regulations and government directives and the
Guarantor has obtained all material licences,
permissions, authorisations and consents necessary
for the conduct of its business and to the best of
its knowledge and belief after due and proper enquiry
all such licences, permissions, authorisations and
consents are in full force and effect;
8.1.11 the audited consolidated accounts of the Guarantor
for the period ending 31st December 1997 have been
prepared in accordance with generally accepted
accounting principles and practices in the United
States of America consistently applied and fairly
represent the financial condition of the Group at
that date and the results of their operations for the
accounting period ended on that date, and there has
been no material adverse change in the consolidated
financial condition of the Group since that date;
8.1.12 there have been no significant losses not disclosed
either in the accounts referred to in Clause 8.1.11
or otherwise disclosed to the Lessor in writing;
8.1.13 to the best of the knowledge, information and belief
of the Guarantor, all information furnished by the
Guarantor to the Lessor relating to the transactions
contemplated by the Guaranteed Agreements is true and
accurate in all material respects and there are no
omissions of material facts or misleading information
contained in such information;
8.1.14 to the best of the knowledge, information and belief
of the Guarantor, neither the Guarantor nor any of
its property or assets is entitled to immunity on the
grounds of sovereignty or otherwise from any legal
action, suit or proceeding, attachment or other legal
process in any jurisdiction;
8.1.15 the Lessee and the other Primary Obligors are wholly
owned direct or indirect Subsidiaries (US) of the
Guarantor;
8.1.16 the Guarantor is reviewing the effect of the Year
2000 Issue on the material computer software,
hardware and firmware systems and equipment
containing embedded microchips owned or operated by
itself, the Lessee and the Sub-Lessee on board the
Vessel (the "VESSEL SYSTEMS"). The costs of any
reprogramming and testing required as a result of the
Year 2000 Issue to permit the proper functioning of
the Vessel Systems and the proper processing of data
are not reasonably expected to result in a default by
the Guarantor in respect of its obligations under
this Guarantee and Indemnity or to have a materially
adverse effect on the business, assets, operations,
prospects or condition (financial or otherwise) of
the Guarantor.
8.1.17 each member of the Group has complied in all material
respects with all Taxation laws in all jurisdictions
in which it is subject to Taxation and has paid all
Taxes due and payable by it and no claims are being
asserted against any member of the Group with respect
to Taxes which, if adversely determined, would be
likely either to have a material adverse effect on
the business or assets or financial condition of the
Group as a whole or materially and adversely to
affect the Guarantor's ability to observe and perform
its obligations under this Guarantee and Indemnity;
8.1.18 no stamp or registration duty or similar taxes or
charges are payable in the States of Delaware or
Texas or under the federal laws of the United States
of America in respect of this Guarantee and Indemnity
or any of the other Lease Documents; and
8.1.19 subject to any qualifications contained in the
Delaware legal opinions addressed to the Lessor (as
referred to in Schedule 5 to the Head Lease) the
choice of English law to govern this Guarantee and
Indemnity is a valid choice of law and English law
will accordingly be applied by the courts in the
State of Delaware and the federal courts of the
United States of America if this Guarantee and
Indemnity or any claim hereunder comes under their
jurisdiction upon proof of the relevant provisions of
English law. The submission hereunder by the
Guarantor to the jurisdiction of the courts of
England and the appointment by the Guarantor of
process agents in England to accept service of
process in respect of the jurisdiction of such courts
is valid and binding upon the Guarantor.
8.2 The representations and warranties by the Guarantor
contained in Clause 8.1 (other than Clauses 8.1.3, 8.1.4,
8.1.9, 8.1.11, 8.1.15, 8.1.17 and 8.1.18) shall be deemed to
be repeated on and as of each Instalment Date as if made
with reference to the facts and circumstances existing at
such date (but so that the representation and warranty in
Clause 8.1.12 shall for this purpose refer to the then
latest audited consolidated financial accounts of the
Guarantor).
8.3 The representations and warranties contained in this Clause
8 and the rights of the Lessor in respect thereof shall
survive the execution and delivery of this Guarantee and
Indemnity.
9. COVENANTS
The Guarantor hereby covenants with the Lessor that, so long
as it remains under any liability, actual or contingent,
under this Guarantee and Indemnity:
9.1 it will provide to the Lessor such financial and
other information relating to the Group as is
publicly available or as the Guarantor makes
available to its creditors generally including,
without limitation, copies of the quarterly and
annual consolidated audited accounts of the Guarantor
and the Group no later than 60 days after the end of
the quarterly period or 180 days after the end of the
annual period (as the case may be) to which they
relate;
9.2 it will provide to the Lessor promptly, such further
information in the possession or control of the
Guarantor or of any of its Subsidiaries (US)
regarding the financial condition and operations of
the Guarantor or any of its Subsidiaries (US), as the
Lessor may reasonably request;
9.3 it will at all times, and from time to time, obtain,
maintain, preserve and keep in full force and effect
any permits, consents, licences and other
authorisations governmental or otherwise as are from
time to time necessary for the performance of its
obligations under this Guarantee and Indemnity and
comply in all material respects with any conditions
attached thereto;
9.4 except with the prior written consent of the Lessor,
not take or accept any Lien (as defined in the Head
Lease) from the Lessee, any other Primary Obligor or
any other person in respect of the Guarantor's
liability under this Guarantee and Indemnity PROVIDED
HOWEVER THAT any such Lien (as defined in the Head
Lease) taken with or without such consent shall be
held by the Guarantor for the benefit of and on trust
for the Lessor so long as the Guarantor remains under
any actual or contingent liability under this
Guarantee and Indemnity;
9.5 forthwith notify the Lessor if the Guarantor becomes
aware of the occurrence of (i) any Termination Event
and (ii) any Guarantor Credit Event;
9.6 it shall procure that the Lessee and the other
Primary Obligors shall remain Subsidiaries (US) of
the Guarantor;
9.7 it shall take all commercially reasonable action to
complete in all material respects by 31 September
1999, the reprogramming and testing of all Vessel
Systems needed as a result of the Year 2000 Issue to
permit the proper functioning of the Vessel Systems.
At the request of the Lessor, the Guarantor shall
provide to the Lessor reasonable assurance of its
compliance with this Clause 9.7;
9.8 its obligations hereunder do and will rank at least
pari passu with all other present and future
unsecured unsubordinated obligations of the Guarantor
other than obligations preferred by laws applicable
to corporations generally in the State of Delaware
and the federal laws of the United States of America.
9.9 Subject to Clause 9.10, the Guarantor shall do or
cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence
and the corporate, partnership and other existence of
each of its Subsidiaries (us) and all rights (charter
and statutory) and franchises of the Guarantor and
its Subsidiaries (us), provided that the Guarantor
shall not be required to preserve the corporate
existence of any Subsidiary (US) of the Guarantor
(excluding in all events the Lessee and, prior to the
Delivery Date, the Option Party) or any such right or
franchise if the Board of Directors shall determine
that the preservation thereof is no longer desirable
in the conduct of the business of the Guarantor and
its Subsidiaries (US) taken as a whole and that the
loss thereof would not have a material adverse effect
on the business, prospects, assets or financial
condition of the Guarantor and its Subsidiaries (US)
taken as a whole and would not have any material
adverse effect on the payment and performance of the
obligations of the Guarantor under this Guarantee and
Indemnity.
9.10 The Guarantor shall not, in any transaction or series
of transactions, consolidate with or merge into any
person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its assets to
any person, unless:
(1) either (a) the Guarantor shall be the
continuing corporation or (b) the person (if
other than the Guarantor) formed by such
consolidation or into which the Guarantor is
merged, or to which such sale, lease,
conveyance, transfer or other disposition
shall be made (collectively, the "Successor"),
is organised and validly existing under the
laws of the United States of America, any
political subdivision thereof or any State
thereof or the District of Columbia, and
expressly assumes the performance of the
Guarantor's covenants and obligations under
this Guarantee and Indemnity;
(2) immediately after giving effect to such
transaction or series of transactions, no
Termination Event shall have occurred and be
continuing or would result therefrom; and
(3) the Guarantor delivers to the Lessor a
certificate certified by a duly authorised
officer of the Guarantor and a legal opinion
in form satisfactory to the Lessor, each
stating that the transaction complies with
this Guarantee and Indemnity.
9.11 The Guarantor will not, and will procure that none of
its Subsidiaries (US) will, either in a single
transaction or in a series of transactions whether
related or not and whether voluntarily or
involuntarily, sell, transfer, or otherwise dispose
of all or a substantial part of the Assets of the
Guarantor or such Subsidiary (US) (in the case of a
Subsidiary (US), being Assets which are substantial
in relation to the Guarantor and its Subsidiaries
(US) taken as a whole), provided that the Guarantor
and any of its Subsidiaries (US) may, either in a
single transaction or in a series of transactions
whether related or not and whether voluntarily or
involuntarily, sell, transfer, or otherwise dispose
of all or a substantial part of the Assets of the
Guarantor or such Subsidiary (US) (in the case of a
Subsidiary (US), being assets which are substantial
in relation to the Guarantor and its Subsidiaries
(US) taken as a whole) if the Board of Directors
shall determine that the retention of such Assets is
no longer desirable in the conduct of the business of
the Guarantor and its Subsidiaries (US) taken as a
whole and that the disposal thereof would not have a
material adverse effect on the business, prospects,
assets or financial condition of the Guarantor and
its Subsidiaries (US) taken as a whole and would not
have any material adverse effect on the payment and
performance of the obligations of the Guarantor under
this Guarantee and Indemnity.
9.12 Limitation on Liens
The Guarantor shall not, and shall not permit any of
its Subsidiaries (US) to, issue, assume or guarantee
any Indebtedness for borrowed money secured by any
Lien upon any Principal Property or any shares of
stock or indebtedness of any Subsidiary (US) that
owns or leases a Principal Property (whether such
Principal Property, shares of stock or indebtedness
are now owned or hereafter acquired) without making
effective provision whereby the Guaranteed
Obligations (together with, if the Guarantor shall so
determine, any other Indebtedness or other obligation
of the Guarantor) shall be secured equally and
ratably with (or, at the option of the Guarantor,
prior to) the Indebtedness so secured for so long as
such Indebtedness is so secured. The foregoing
restrictions will not, however, apply to Indebtedness
secured by Permitted Liens.
Notwithstanding the foregoing, the Guarantor and its
Subsidiaries (US) may, without securing the liability
of the Guaranteed Obligations, issue, assume or
guarantee Indebtedness that would otherwise be
subject to the foregoing restrictions in an aggregate
principal amount that, together with all other such
Indebtedness of the Guarantor and its Subsidiaries
(US) that would otherwise be subject to the foregoing
restrictions (not including Indebtedness permitted to
be secured under the definition of Permitted Liens)
and the aggregate amount of Attributable Indebtedness
deemed outstanding with respect to Sale/Leaseback
Transactions (other than those in connection with
which the Company has voluntarily retired any Pari
Passu Indebtedness or any Funded Indebtedness
pursuant to Clause 9.12(c)) does not at any one time
exceed fifteen percent. (15%) of Consolidated Net
Tangible Assets of the Guarantor and its consolidated
Subsidiaries (US).
9.13 Limitation on Sale/Leaseback Transactions
The Guarantor shall not, and shall not permit any
Subsidiary (US) to, enter into any Sale/Leaseback
Transaction with any person (other than the Guarantor
or a Subsidiary (US)) unless:
(a) the Guarantor or such Subsidiary (US) would be
entitled to incur Indebtedness in a principal
amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback
Transaction secured by a Lien on the property
subject to such Sale/Leaseback Transaction
pursuant to Clause 9.13 without equally and
ratably securing the obligations of the
Guarantor under the Guarantee and Indemnity
pursuant to such covenant;
(b) after the date of this Guarantee and Indemnity
and within a period commencing nine months
prior to the consummation of such
Sale/Leaseback Transaction and ending nine
months after the consummation thereof, the
Guarantor or such Subsidiary (US) shall have
expended for property used or to be used in
the ordinary course of business of the
Guarantor and its Subsidiaries (US) an amount
equal to all or a portion of the net proceeds
of such Sale/Leaseback Transaction and the
Guarantor shall have elected to designate such
amount as a credit against such Sale/Leaseback
Transaction (with any such amount not being so
designated to be applied as set forth in
clause (c) below or as otherwise permitted);
or
(c) the Guarantor, during the nine-month period
after the effective date of such
Sale/Leaseback Transaction, shall have applied
to either (i) the voluntary defeasance or
retirement of any Pari Passu Indebtedness or
any Funded Indebtedness or (ii) the
acquisition of one or more Principal
Properties at fair value, an amount equal to
the greater of the net proceeds of the sale or
transfer of the property leased in such
Sale/Leaseback Transaction and the fair value,
as determined by the board of directors of the
Guarantor and evidenced by a board resolution,
of such property at the time of entering into
such Sale/Leaseback Transaction (in either
case adjusted to reflect the remaining term of
the lease and any amount expended by the
Guarantor as set forth in clause (b) above),
less an amount equal to the sum of the
principal amount of Pari Passu Indebtedness
and Funded Indebtedness voluntarily defeased
or retired by the Guarantor plus any amount
expended to acquire any Principal Properties
at fair value, within such nine-month period
and not designated as a credit against any
other Sale/Leaseback Transaction entered into
by the Guarantor or any Subsidiary (US) during
such period.
9.14 The Guarantor hereby covenants with the Lessor that,
so long as it remains under any liability, actual or
contingent, under this Guarantee and Indemnity it
shall provide to the Lessor a certificate, signed by
a Director of the Guarantor, stating that (i) the
Lessee is complying with clause 11.7(c) of the Head
Lease and (ii) the Guarantor shall procure that the
Lessee will continue to comply with clause 11.7(c) of
the Head Lease, such certificate to be provided at
the same time as it is required to provide to the
Lessor the annual consolidated audited accounts of
the Guarantor and the Group pursuant to Clause 9.1.
10. PAYMENTS AND TAXES
10.1 PAYMENTS
10.1 PAYMENTS AND TAXES
(a) All sums payable to the Lessor pursuant to or in
connection with this Guarantee or Indemnity shall be
paid in full without any set-off or counterclaim
whatsoever and free and clear of all deductions or
withholdings whatsoever save only as may be required
by law.
(b) If any deduction or withholding is required by law in
respect of any payment due to the Lessor pursuant to
or in connection with this Guarantee and Indemnity or
any document contemplated by or entered into pursuant
hereto, the Guarantor shall:
(i) ensure or procure that the deduction or
withholding is made and that it does not
exceed the minimum legal requirement therefor;
(ii) pay, or procure the payment of, the full
amount deducted or withheld to the relevant
Taxation or other authority in accordance with
the applicable law;
(iii) increase the payment in respect of which the
deduction or withholding is required so that
the net amount received by the Lessor after
the deduction or withholding (and after taking
account of any further deduction or
withholding which is required to be made which
arises as a consequence of the increase) shall
be equal to the amount which the Lessor would
have been entitled to receive in the absence
of any requirement to make a deduction or
withholding; and
(iv) promptly deliver or procure the delivery to
the Lessor of appropriate receipts evidencing
the deduction or withholding which has been
made.
(c) If the Lessor determines in its absolute discretion
that it has received, realised, utilised and retained
a Tax benefit by reason of any deduction or
withholding in respect of which the Guarantor has
made an increased payment or paid a compensating sum
under this Clause 10.1 the Lessor shall, provided the
Lessor has received all amounts which are then due
and payable under any of the provisions of this
Guarantee and Indemnity, pay to the Guarantor (to the
extent that the Lessor can do so without prejudicing,
the amount of that benefit and the right of the
Lessor to obtain any other benefit relief or
allowance which may be available to it) as soon as
reasonably practicable such amount, if any, as the
Lessor shall determine in its absolute discretion
will leave the Lessor in no better and no worse
position than the Lessor would have been in if the
deduction or withholding had not been required,
PROVIDED THAT:
(i) the Lessor shall have an absolute discretion
as to the time at which and the order and
manner in which it realises or utilises any
Tax benefit;
(ii) the Lessor shall not be obliged to disclose
any information regarding its business, Tax
affairs or Tax computations;
(iii) if the Lessor has made a payment to the Lessee
pursuant to Clause 10.1(c) on account of any
Tax benefit and it subsequently transpires
that the Lessor did not receive that Tax
benefit, or received a lesser Tax benefit, the
Guarantor shall pay on demand to the Lessor
such sum as the Lessor may determine as being
necessary to restore the after-Tax position of
the Lessor to that which it would have been
had no adjustment under this proviso (iii)
been necessary.
(iv) the Lessor shall not be obliged to make any
payment under this Clause 10.1 if, by doing
so, it would contravene the terms of any
applicable law or any notice, direction or
requirement of any governmental or regulatory
authority (whether or not having the force of
law);
PROVIDED FURTHER THAT if the Guarantor requests the
Lessor, in writing, to make an application pursuant
to the provisions of a double tax treaty for relief
(whether in whole or in part) in respect of any
deduction or withholding required by law, the Lessor
shall (at the cost of the Guarantor) take such action
as the Guarantor shall reasonably request to make
such application to an applicable Tax authority. If
the Lessor subsequently obtains a repayment (whether
in whole or in part) of such deduction or withholding
from that Tax authority in circumstances where the
Guarantor has made an increased payment or paid a
compensating sum under this Clause 10.1 the Lessor
shall, provided that the Lessor has received all
amounts which are then due and payable by the
Guarantor under any of the provisions of this
Guarantee and Indemnity, pay to the Guarantor as
great an amount of the repayment as possible as will
leave the Lessor in no worse position than the Lessor
would have been in if the deduction or withholding
had not been required.
10.2 VALUE ADDED TAX
(a) If the Lessor makes any supply for Value Added Tax
purposes pursuant to or in connection with this
Guarantee and Indemnity or any transaction or
document contemplated herein, the Guarantor shall
(save to the extent that the Lessor is entitled to be
indemnified in respect of that Value Added Tax by an
increased payment under Clause 10.2(b) below) at such
time as the Lessor certifies to the Guarantor that
any amount of VAT payable in respect of that supply
has not been paid to the Lessor and having duly
accounted for such VAT to Customs and Excise at the
correct time and having duly claimed bad debt relief
in respect of that VAT the Lessor either has or has
not received such relief, pay on demand to the Lessor
an amount equal to the aggregate of any Value Added
Tax which is payable in respect of that supply and
has not been the subject of bad debt relief and
interest on an amount equal to any Value Added Tax
payable in respect of the supply at LIBOR ascertained
in respect of the date on which such VAT was
accounted for to Customs and Excise for the period
from that date until the date of the Lessor's
certificate or the date upon which bad debt relief is
received.
(b) Save where expressly provided to the contrary, all
payments made under this Guarantee and Indemnity are
calculated without regard to Value Added Tax. If any
such payment constitutes the whole or any part of the
consideration for a taxable or deemed taxable supply
(whether that supply is taxable pursuant to the
exercise of an option or otherwise), the amount of
that payment shall be increased by an amount equal to
the amount of Value Added Tax which is chargeable in
respect of the taxable supply in question PROVIDED
THAT the Lessor shall not be liable to pay an amount
in respect of Value Added Tax until such time as, and
to the extent that it receives a credit for such VAT
as "INPUT TAX", as defined in sub-section (1) of
section 24 of VATA, under sections 25 and 26 of VATA,
in which case such payment shall be made as soon as
practicable after the credit is received.
(c) If any amount of Value Added Tax paid by the Lessor
pursuant to this Guarantee and Indemnity shall be
Irrecoverable VAT, the Guarantor shall forthwith on
demand by the Lessor indemnify the Lessor and keep
the Lessor fully indemnified at all times against
such Irrevocable VAT PROVIDED THAT if the Lessor
determines that such Irrecoverable VAT subsequently
proves to be recoverable, the Lessor shall pay to the
Guarantor such amount, if any, as the Lessor in its
absolute discretion shall determine will leave the
Lessor in no better and no worse a position than the
Lessor would have been in if no payment had been made
by the Guarantor to the Lessor under this
Clause 10.2(c).
11. ADDITIONAL SECURITY
This Guarantee and Indemnity is in addition to and is not to
prejudice, or be prejudiced by, any other guarantee or
security for the obligations of the Lessee, any other
Primary Obligor or any other person under the Guaranteed
Agreements or otherwise now or hereafter held by the Lessor
and it shall not be necessary for the Lessor before claiming
payment under this Guarantee and Indemnity to resort to or
seek to enforce any other guarantee or security in respect
of the said obligations of the Lessee, any other Primary
Obligor or any other person.
12. ACKNOWLEDGEMENT AND DECLARATION
12.1 The Guarantor agrees, acknowledges and declares that:
12.1.1 if any payment received by the Lessor in respect of
monies owing or due and payable by the Lessee and/or
any other Primary Obligor shall on the subsequent
insolvency or liquidation of the Lessee and/or any
other Primary Obligor be avoided under any laws
relating to insolvency or liquidation, such payment
shall not be considered as discharging or diminishing
the liability of the Guarantor under this Guarantee
and Indemnity and this Guarantee and Indemnity shall
continue to apply as if such payment had at all times
remained owing by the Lessee and/or any other Primary
Obligor;
12.1.2 this Guarantee and Indemnity shall remain the
property of the Lessor and notwithstanding that all
monies and liabilities due or incurred by the Lessee
and/or any other Primary Obligor to the Lessor which
are guaranteed hereunder shall have been fully paid
and discharged the Lessor shall be entitled not to
discharge this Guarantee and Indemnity or any
security held by the Lessor for the obligations of
the Guarantor hereunder until the Guarantor shall
have procured that the Lessor receives legal opinions
in form and content reasonably satisfactory to the
Lessor in relation to the risk to the Lessor of
payments received by the Lessor being avoided, set
aside or being required to be repaid in the event of
bankruptcy, winding-up or any similar proceedings
being commenced in respect of the Lessee and/or any
other Primary Obligor and in the event of bankruptcy,
winding-up or any similar proceedings being commenced
in respect of the Lessee and/or any other Primary
Obligor the Lessor shall be at liberty not to
discharge this Guarantee and Indemnity or any
security held by the Lessor for the obligations of
the Guarantor hereunder for and during such further
period as the Lessor may reasonably determine;
12.1.3 if the Guarantor has not paid to the Lessor the full
amount of all sums then due under this Guarantee and
Indemnity the Lessor shall be entitled, for the
purpose of enabling the Lessor to xxx the Lessee, any
other Primary Obligor and/or any other guarantor of
the liabilities which are guaranteed by this
Guarantee and Indemnity or for proving in its or
their liquidation or in any similar proceedings for
any monies due and unpaid by the Lessee and/or any
other Primary Obligor to the Lessor, at any time
place and keep for such time as it may think fit any
monies received hereunder, or under any of such other
guarantees or from any other person, to the credit of
an interest bearing securities realised account or
accounts without any obligation on the part of the
Lessor to apply the same or any part thereof in or
towards the discharge of the indebtedness and
liabilities of the Lessee and/or any other Primary
Obligor to the Lessor;
12.1.4 it has received executed copies of, and is aware of
the terms of, the Guaranteed Agreements; and
12.1.5 in respect of the Guarantor's liability hereunder
after the Lessor has made any demand for payment, the
Lessor upon giving the Guarantor notice (except where
set off operates by law) shall be entitled to set off
the Guarantor's liability against any credit balance
to which the Guarantor is beneficially entitled on
any account or accounts which the Guarantor may have
at any of the offices or branches of any member of
Barclays Bank plc and to retain as security for the
discharge of the Guarantor's liabilities all
securities or other property of the Guarantor held by
the Lessor (whether for safe custody or otherwise)
PROVIDED THAT nothing herein contained shall apply to
create any charge which depends for its validity on
being duly recorded in any public registry.
13. ASSIGNMENT
13.1 ASSIGNMENT BY LESSOR
The Guarantor acknowledges and agrees that the Lessor shall
be entitled at any time and from time to time to assign,
transfer or otherwise dispose of all of its interest in the
Vessel together with this Guarantee and Indemnity and the
Lease Documents to which it is a party to any person to whom
the Lessor may assign, transfer or otherwise dispose of all
of its interest in the Vessel and the benefit and burden of
the Lease Documents to which it is a party pursuant to
Clause 28 of the Head Lease provided that, the Guarantor
shall not be required to suffer or incur any greater cost
under this Guarantee and Indemnity than would have been the
case but for such assignment.
13.2 ASSIGNMENT BY GUARANTOR
Save as contemplated by Clause 9.10 the Guarantor may not
assign, transfer or part with any of its rights or
obligations under this Guarantee and Indemnity or any of the
Lease Documents without the prior written consent of the
Lessor.
14. COSTS AND EXPENSES
The Guarantor shall indemnify the Lessor, on a full
indemnity basis, from and against, and on demand reimburse
the Lessor for, all costs, charges and expenses, properly
incurred following a Relevant Event by the Lessor in
connection with or incidental to the protection and
preservation of the security hereby constituted or the
exercise or enforcement of, or in endeavouring to exercise
or enforce, any right or remedy conferred upon the Lessor
hereunder or by law including in connection with any action
brought by the Lessor to recover any payment due hereunder,
or relating to any breach of any covenant or obligation in
this Guarantee and Indemnity, whether or not any such action
progresses to judgment.
15. MISCELLANEOUS
15.1 DELAY IN ENFORCEMENT, WAIVERS ETC.
All waivers of any right, power or privilege by either party
hereto shall be in writing signed by such party. No failure
or delay on the part of either party in exercising any power
or right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise of any such right or
power preclude any other or further exercise of any such
right or power. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies
provided by law or in equity.
15.2 Variation
This Guarantee and Indemnity shall only be amended, modified
or varied by an instrument in writing executed by or on
behalf of the parties hereto.
15.3 INVALIDITY
If any term or provision of this Guarantee and Indemnity or
the application thereof to any person or circumstance shall
to any extent be invalid or unenforceable under any
applicable law neither the remainder of this Guarantee and
Indemnity or application of such term or provision to
persons or circumstances other than those as to which it is
already invalid or unenforceable shall be affected thereby
nor shall the validity, legality and enforceability of such
term or provision under the laws of any other jurisdiction
be in any way affected or impaired.
15.4 NOTICES
15.4.1 Any demand, consent, record, election or notice (a
"NOTICE") required or permitted to be given by either
party to the other under this Guarantee and Indemnity
shall be in writing and sent by first-class prepaid
airmail post or delivered by hand or sent by fax
addressed as follows:
(i) if to the Guarantor to:
Global Marine Inc.
000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxx
Xxxxx 00000
Xxxxxx Xxxxxx of America
Fax: x(0) 000 000 0000
Attention: General Counsel
(ii) if to the Lessor to:
BMBF (No.12) Limited
Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxx
Xxxxxxxxxxx
Xxxxxxxxx
XX00 0XX
Fax: +(44) (0)0000 000 000
Attention: Company Secretary
Referring to: "Schedule Number 52/5050 5371-3"
or in each case to such address or facsimile number
as one party may, by not less than three (3) Houston
Business Days' notice, notify in writing to the other
party hereto.
15.4.2 Any notice shall be deemed to have been given or
received to or by the party to whom it is addressed
ten (10) days following posting, if posted by first
class prepaid airmail post and on receipt, if
delivered by hand. Any notice sent by fax shall be
treated as received only when the sender has received
a fax by return from the recipient acknowledging
receipt.
15.5 APPLICABLE LAW
This Guarantee and Indemnity shall be governed by and
construed, and performance thereof shall be determined, in
accordance with the laws of England.
15.6 COUNTERPARTS
This Guarantee and Indemnity may be executed in several
counterparts and any single counterpart or set of
counterparts, signed in either case by all of the parties,
shall be deemed to be an original, and all taken together
shall constitute one and the same instrument.
15.7 FURTHER ASSURANCES
The Guarantor agrees from time to time, and at the
Guarantor's expense, to do and perform such other and
further acts and execute and deliver any and all such other
instruments as may be required by law or reasonably
requested by the Lessor to establish, maintain and protect
the rights and remedies of the Lessor and to carry out and
effect the intent and purpose of this Guarantee and
Indemnity and the other Lease Documents.
15.8 ENTIRE AGREEMENT
This Guarantee and Indemnity, in conjunction with the Lease
Documents and any letter agreements of even date herewith
between the Guarantor and the Lessor, constitutes the entire
agreement between the parties hereto in relation to this
Guarantee and Indemnity and supersedes all previous
proposals, agreements and other written and oral
communications in relation thereto.
16. SUBMISSION TO JURISDICTION
16.1 For the exclusive benefit of the Lessor, the Guarantor
hereby submits to the non-exclusive jurisdiction of the
courts of England with regard to this Guarantee and
Indemnity. By its execution and delivery of this Guarantee
and Indemnity, the Guarantor:
(i) hereby accepts for itself and in respect of its
property, generally and unconditionally, the non-
exclusive jurisdiction of the aforesaid courts with
respect to this Guarantee and Indemnity;
(ii) waives any objections on the grounds of venue or
forum non conveniens or any similar grounds and
agrees that legal proceedings in any one or more
jurisdictions shall not preclude legal proceedings in
any other jurisdiction with respect to this Guarantee
and Indemnity; and
(iii) agrees that final judgment against it in any action
or proceedings shall be conclusive and may be
enforced in any other jurisdiction with respect to
this Guarantee and Indemnity within or outside
England by suit on the judgment, a certified copy of
which shall be conclusive evidence of the fact and of
the amount of its indebtedness.
16.2 The Guarantor, in the case of the courts of England, hereby
designates, appoints and empowers WFW Legal Services Limited
(ref. CALP/2628.16002) at its registered office for the time
being, currently 00 Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX to
receive, for and on behalf of it, service of process in such
jurisdiction in any legal action or proceedings with respect
to this Guarantee and Indemnity. The Guarantor undertakes
to maintain an agent for the service of process in England
at all times whilst the Guarantor has any liability, actual
or contingent, under this Guarantee and Indemnity. It is
understood that a copy of any process served as above will
be promptly forwarded (if necessary) by first class prepaid
mail to the Guarantor, but the failure of the Guarantor to
receive such copy shall not affect in any way the service of
such process on the said person as the agent of the
Guarantor.
16.3 To the extent that the Guarantor or any of the property of
the Guarantor is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any competent court,
from service of process, from attachment prior to judgment,
from attachment in aid of execution, or from execution prior
to judgment, or other legal process in any jurisdiction, the
Guarantor for itself and its property does hereby
irrevocably and unconditionally waive, and agrees not to
plead or claim, any such immunity with respect to its
obligations, liabilities or any other matter under or
arising out of or in connection with this Guarantee and
Indemnity or the subject matter hereof or thereof.
17. JUDGMENT CURRENCY
If, under any applicable law, whether as a result of a
judgment against the Guarantor or the liquidation of the
Guarantor or for any other reason, any payment under or in
connection with this Guarantee and Indemnity is made or is
recovered in a currency (the "OTHER CURRENCY") other than
that in which it is required to be paid hereunder (the
"ORIGINAL CURRENCY") then, to the extent that the payment
(when converted at the rate of exchange and after deducting
commission on the date of payment or, in the case of a
liquidation, the latest date for the determination of
liabilities permitted by the applicable law) falls short of
the amount which is required to be paid under or in
connection with this Guarantee and Indemnity as aforesaid,
the Guarantor shall as a separate and independent obligation
fully indemnify the Lessor on demand against the amount of
the shortfall; and for the purposes of this Clause 17 "RATE
OF EXCHANGE" means the rate at which the Lessor is able as
at 11.00 a.m. (London time) on the relevant date to purchase
the Original Currency with the Other Currency.
18. NATURE OF DOCUMENT
This Guarantee and Indemnity is a deed.
IN WITNESS whereof the Guarantor and the Lessor have caused this
Guarantee and Indemnity to be duly executed and delivered the day
and year first above written.
EXECUTED AND DELIVERED )
as a DEED by W. Xxxx Xxxxx ) W. Xxxx Xxxxx
GLOBAL MARINE INC. )
in the presence of: )
Xxxx Xxxxx
SIGNED by X. Xxxxxxx ) X. Xxxxxxx
For and on behalf of )
BMBF (NO.12) LIMITED )
