EXHIBIT 10.318
INDEMNITY AGREEMENT
Pursuant to this Indemnity Agreement (this "Agreement"), each of R&B FALCON
CORPORATION, a Delaware corporation ("Falcon") and RBF EXPLORATION II INC.,
a Nevada corporation all of the capital stock of which is owned by Falcon
("RBF II" and, collectively with Falcon, the "Indemnitors"), hereby
requests TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Xxx Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, and AMERICAN HOME ASSURANCE COMPANY,
000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, each for itself and
its affiliates, parent, and subsidiaries, (individually, a "Company" and
collectively, the "Companies") to severally and not jointly furnish a
performance bond, in the maximum penal sum of $265,000,000 (including any
and all interest, attorney's fees, expenses, costs and liquidated damages),
as evidenced by and as described by the Performance Bond, dated on or
around February 1, 2000, given by the Companies and RBF II in favor of BTM
Capital Corporation (the "Owner") and the Indenture Trustee (as defined in
the Bond, the "Indenture Trustee") (such performance bond, as amended,
modified or supplemented from time to time with the consent of the
Companies, hereinafter referred to as the "Bond"), and as an inducement
therefore each of the Indemnitors makes the following representations of
fact, promises and agreements:
REPRESENTATIONS OF FACT:
1. RBF II is required to deliver the Bond in connection with a
Construction Supervisory Agreement, dated as of February 1, 2000, among RBF
II, RBF Exploration Co. ("RBFE") and the Owner (as amended from time to
time (as permitted by the indenture governing the Indenture Trustee or
otherwise) with the consent of the Companies, the "CSA"), whereby RBF II is
to supervise the design, construction, and delivery of a semi-submersible
vessel in accordance with a written agreement, dated November 14, 1997,
known as the Contract for Construction and Sale of Vessel (Hull No. HRBS6),
between RBFE and Hyundai Heavy Industries Co., Ltd. and Hyundai
Corporation, and in accordance with a written agreement, dated August 12,
1998, known as the Offshore Daywork Drilling Contract, between RBFE and
Shell Deepwater Development, Inc.
2. Each of the Indemnitors has a substantial, material and
beneficial interest in the obtaining of the Bond and it is understood that
the purpose of this Agreement is to induce the Companies to furnish the
Bond. It is understood and agreed, however, that the Companies are under no
obligation to furnish the Bond and, once furnished, the obligations of the
Companies in respect thereof shall be subject to limitation as provided
therein.
PROMISES AND AGREEMENTS: In consideration of the furnishing of the Bond by
the Companies and for other valuable consideration, each of the Indemnitors
hereby jointly and severally promises and agrees as follows:
1. To pay all premiums for the Bond (including for any amendments,
modifications, supplements and replacements), as they fall due, and until
each of the Companies has been provided with competent legal evidence that
the Bond has been duly discharged.
2. To indemnify and exonerate each of the Companies from and against
any and all loss and expense of whatever kind, including, without
limitation, interest, court costs and counsel fees (hereinafter referred to
as "Loss"), which they or either of them may incur or sustain as a result
of or in connection with (x) the furnishing of this Bond and (y) the
enforcement of this Agreement. To this end, each Indemnitor jointly and
severally promises:
(a) To promptly reimburse the Companies or either of them for
all sums paid on account of such Loss and it is agreed that (1)
originals or photocopies of claim drafts, or of payment records kept
in the ordinary course of business, including computer printouts,
verified by affidavit, shall be (in the absence of manifest error)
prima facie evidence of the fact and amount of such Loss, (2) either
or both the Companies shall be entitled to reimbursement for any and
all disbursements made by either or both of them in good faith, under
the belief that either or both of them were liable, or that such
disbursement was necessary or expedient.
(b) To deposit with the Companies or either of them on demand
the amount of any reserve against such Loss which either of the
Companies is required, or deems it prudent to establish, whether on
account of an actual liability or one which is, or may be, asserted
against either or both of them, and whether or not any payment for
such Loss has been made.
3. Each Indemnitor acknowledges and agrees that the obligations
contained in this Agreement were substantial consideration for the issuance
of the Bond, and that the Bond would not have been given without the
execution and delivery of this Agreement by the Indemnitors.
4. The validity and effect of this Agreement shall not be impaired
by, neither Company shall incur any liability on account of, and the
Indemnitors need not be notified of:
(a) Either or both Companies' failure or refusal to furnish the
Bond.
(b) Either or both Companies' consent or failure to consent to
changes in the terms and provisions of the Bond, or the obligation or
performance secured by the Bond.
(c) The taking, failing to take, or release of security,
collateral, assignment, indemnity agreements and the like, as to the
Bond.
(d) The release by either Company, on terms satisfactory to it,
of either or both Indemnitors.
(e) Information which may come to the attention of either
Company which affects or might affect its rights and liabilities or
those of either of the Indemnitors.
5. Neither Indemnitor shall have rights of indemnity, contribution
or right to seek collection of any other outstanding obligation against the
other Indemnitor or any other indemnitors or its property until the
Indemnitors' obligations to the Companies under this Agreement shall have
been satisfied in full.
6. Each Indemnitor also understands and agrees that its obligations
remain in full force and effect for the Bond, notwithstanding that the
entity on whose behalf the Bond was issued has been sold, dissolved, placed
in an insolvency proceeding or whose ownership has been otherwise altered
or affected in any way.
7. This Agreement is in addition to and not in lieu of any other
agreements and obligations undertaken in favor of either or both of the
Companies.
8. (a) Without limiting the rights of the Companies under paragraph
2 hereof, from time to time, the obligees under the Bond may make a
demand for payment or for performance (a "Demand") against the Bond.
Subject to the terms and conditions of the Bond, when such Demand is
made, the Companies must pay the amount of the Demand or cause
completion to occur under the Bond within the time period required by
the Demand. The Companies, with the knowledge and consent of the
Indemnitors, have expressly waived any defenses to making such payment
or to causing completion to occur pursuant to the terms of the Bond.
If either or both of the Indemnitors receive notice from either or
both of the Companies that a Demand has been made against the Bond by
the obligees, the Indemnitors will, within 10 days from receipt of
such notice, pay the Companies the full amount of the Demand, as well
as all necessary fees. Such payment will be made by wire transfer or
otherwise in immediately available funds to the bank account specified
in the notice provided to such Indemnitor by the Companies.
(b) Each Indemnitor waives, to the fullest extent permitted by
applicable law, each and every right which it may have to contest such
payment or performance by either or both of the Companies. Failure to
make payment to the Companies as herein provided shall cause the
Indemnitors to be additionally and jointly and severally liable for
any and all reasonable costs and expenses, including attorney's fees,
incurred by either or both of the Companies in enforcing this
Agreement, together with interest on unpaid amounts due the Companies.
Interest shall accrue, commencing the date either Company pays the
amount of the Demand, at the prime rate of interest in effect on
December 31 of the previous calendar year as published in the Wall
Street Journal plus two percentage points (but such interest rate
shall be limited to the greatest amount permitted pursuant to
applicable law).
9. Each Indemnitor will ensure that at all times the claims of the
Companies against it hereunder rank at least pari passu with claims of all
other unsecured creditors of such Indemnitor, other than creditors
preferred by operation of law.
10. Either Indemnitor shall be considered to be in default of this
paragraph if (a) it fails to pay any principal or premium or interest on
any Debt which is outstanding in the principal amount of at least
$12,500,000 in the aggregate, when the same becomes due and payable and
such failure results in acceleration of the maturity of the principal of
such Debt; or (b) any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition results
in acceleration of the maturity of the principal of such Debt; or (c) any
such Debt shall otherwise be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled required prepayment or as a
result of the giving of notice of a voluntary prepayment), prior to the
stated maturity therefore. "Debt", for the purposes of this paragraph,
shall be defined with respect to either Indemnitor as any indebtedness
incurred in respect of (i) money borrowed, (ii) the issue of any bond,
note, debenture or similar instrument, (iii) acceptance of documentary
credit facilities, (iv) deferred payments for assets or services acquired,
(v) any transaction having, and intended by such Indemnitor to have the
commercial effect of borrowing money, (vi) guarantees, bonds, letters of
credit or similar instruments issued in connection with the performance of
contracts, (vii) interest rate hedging arrangements, including without
limitation, swaps, cap and collar arrangements and any foreign currency or
other hedging arrangements, (viii) rental payments with regard to land,
machinery, equipment or otherwise entered into primarily as a method of
raising finances or of financing the acquisition of the asset leased, and
(ix) guarantees or other assurances against financial loss in respect of
Debt of a person other than such Indemnitor. In the event of a default
under this paragraph, the Indemnitors shall promptly upon written demand by
the Companies deposit with an escrow agent (which shall be a reputable
banking institution offering escrow services) an amount which shall
represent the Companies' pro rata share (based on the full amount of the
Bond), on a pari passu basis, of any and all amounts paid to or otherwise
given as security for the benefit of the other unsecured lenders by either
of the Indemnitors in connection with or related to such failure, event,
condition, declaration or requirement. The escrow account shall be
available to the Companies to satisfy any liability or expense incurred by
either of them under the Bond.
11. This Agreement shall apply to the Bond and to any other bond
furnished by either of the Companies in respect of the Indemnitors'
obligations under the CSA, or where procured by either of the Companies,
any other bond furnished by any other entity in respect of the Indemnitors'
obligations under the CSA, and each other insurer or re-insurer with
respect to the obligations of the Companies hereunder, and if such entity
is another surety, co-surety, insurer or co-insurer, such entity shall also
have the benefit of this Agreement and the right to proceed thereon,
provided that nothing contained in this paragraph shall require that either
Company furnish or procure any other bond other than the Bond.
12. The Indemnitors shall promptly furnish to the Companies (a) a
copy of each requisition form delivered to the Owner pursuant to Section
3.2(a) of the CSA, (b) a copy of each notice (including, without
limitation, a notice of the occurrence of an Event of Default) received in
connection with the CSA and (c) a certificate of the Indemnitors, on or
within 5 days of the Anticipated Delivery Date (as defined in the CSA),
certifying the status of the Project (as defined in the CSA), whether
Completion (as defined in the CSA) has occurred or when it is reasonably
likely to occur, and providing salient facts related to such status and
Completion. The Indemnitors shall promptly furnish to the Companies such
other information as the Companies may reasonably request relating to or
arising out of the Bond, the CSA or this Agreement.
13. Without limitation of the other provisions hereof, each
Indemnitor agrees to cooperate with and assist the Companies and their
agents in performing their respective obligations under the Bond (including
their obligation of performance and completion) and the Indemnitors shall
take no action the effect of which would be to materially impair the
ability of the Companies to perform their obligations under the Bond.
14. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
15. Each agreement or covenant of either Indemnitor contained herein
shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance
with any one covenant shall not (absent such an express contrary provision)
be deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any party, or which any
party is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such party.
16. This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of
the parties hereto.
17. This Agreement may be amended, and the observance of any term
hereof may be waived, with (and only with) the written consent of the
Companies and the Indemnitors.
18. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE
STATE OF CONNECTICUT EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
19. EACH INDEMNITOR HAS READ THIS AGREEMENT CAREFULLY. THERE ARE NO
SEPARATE AGREEMENTS OR UNDERTAKINGS WHICH IN ANY WAY LESSEN THE OBLIGATIONS
OF THE INDEMNITORS AS ABOVE SET FORTH.
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WITNESS: The following signatures as of this _____ day of January, 2000.
Indemnitors:
Falcon Federal Tax ID: 00-0000000
R&B FALCON CORPORATION
By____________________________________________(Seal)
Name:
Title:
Attest_______________________________________________
Name:
Title:
RBF II Federal Tax ID:
RBF EXPLORATION II INC.
By____________________________________________(Seal)
Name:
Title:
Attest_______________________________________________
Name:
Title:
