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EXHIBIT 10.2
MASTER RIG LEASE AND
MANAGEMENT SERVICES AGREEMENT
This MASTER RIG LEASE AND MANAGEMENT SERVICES AGREEMENT (the "Lease")
is made on this ____ day of April, 1999 by and between Bayard Drilling, L.P., a
Delaware limited partnership ("Lessor") and Xxxxxx Drilling USA, Inc., a
Delaware corporation ("Lessee").
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereto agree as follows:
1. Lease of Equipment and Management Services. Subject to, and upon all of
the terms and conditions of this Lease, Lessor hereby leases to the
Lessee, and Lessee hereby leases from Lessor, those certain oil
drilling rigs ("Drilling Rigs") and all pipe, collars, equipment,
inventories and supplies associated with the Drilling Rigs set forth in
Attachment A (the "Property"). Lessee agrees to provide such management
and administrative services as may be requested by Lessor, including
but not limited to, day-to-day operations, district office and regional
office; accounting, tax, legal, insurance and other stewardship
services as required.
2. Lease Term.
a. The initial term (the "Initial Term") of this Lease shall
commence on the date hereof and terminate on December 31,
1999. Lessee shall have the right and option to renew this
Lease for up to three successive one-year periods (the "Option
Term") following the expiration of the Initial Term. Lessee
shall be deemed to have exercised such renewal rights unless
and until it has given notice to Lessor that it desires to
terminate this Lease. This required notice must be given in
writing in accordance with Article 19 and must be received by
Lessor not less than thirty days prior to the expiration of
the Initial Term or such one-year period as applicable. If
Lessee has not given a proper notice of termination in
accordance herewith, the term of this Lease shall be extended
automatically for an additional one-year period and shall
remain in effect until the Lease is terminated by either party
by notice to the other party not less than 30 days prior to
the expiration of any such successive one-year period during
the Option Term. Any such termination shall be effective only
on the last day of the Initial Term or the last day of any
such successive one-year period during the Option Term, as the
case may be. The terms and conditions contained in this
Agreement shall govern during the Option Period. Lessee shall
have the right to terminate this Lease upon giving Lessor 30
days' prior written notice.
b. As used herein, the term "Lease Term" means, subject to
termination as provided above and in Section 11, the Initial
Term and all such successive one-year periods during the
Option Term for which this Lease is extended.
3. Rent.
a. The Lessee shall pay to the Lessor for use of the Property
during the Lease Term rent to be determined on the following
basis ("Rent"). The Rent for each Drilling Rig shall be 5% of
the Equivalent Operating Dayrate (as defined below) for such
Drilling Rig. For daywork contracts entered into by Lessee,
the Rent shall be payable for each day that Lessee receives
Operating Dayrate for the Drilling Rig. For footage and
turnkey contracts, the Rent is payable for each day the
Drilling Rig operates from spud of well through the rig
release.
For daywork contracts the Equivalent Operating Dayrate is
defined as:
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(Contract Operating Dayrate x Actual Operating Days) - (Mobilization
and Demobilization losses) Actual Operating Days
For footage and turnkey contracts the Equivalent Operating
Dayrate is defined as the Operating Dayrate for daywork
operations as specified in the contract even if such dayrate
is not used for billing purposes.
The parties acknowledge and agree that the Rent represents a
reasonable rate or rent for the Drilling Rigs after deducting
a reasonable charge for the management services provided by
Lessee hereunder.
b. Lessee shall be responsible for and shall defend and indemnify
and hold Lessor harmless from the payment of any taxes,
duties, import and export charges and other charges or fees
(and any related fines, penalties or interest) of any type or
description imposed directly or indirectly on Lessee or Lessor
by any federal, state, local, or foreign government or taxing
authority as a result of this Lease, the property, or the
operation or use of the property.
c. Interest on any past due payments under this Lease shall
accrue at the rate of 1 1/2% per month, or if such rate shall
exceed the maximum rate allowed by law, then at such maximum
rate, and shall be payable on demand. Charges for taxes,
levies, imposts, duties, fees, assessments or other charges,
penalties and interest shall be paid promptly by Lessee when
invoiced by Lessor.
4. Delivery of the Property. The Property shall be leased to Lessee, and
Lessee accepts the Property where-is, as-is.
5. Ownership and Use.
a. The Property shall at all times be the sole and exclusive
property of the Lessor. The Lessee shall have no rights or
property interest in the Property, except for the right to use
the Property in normal operations during the Lease Term.
Lessee shall not use the Property for any purpose for which it
was not designed or intended by the manufacturer thereof.
b. After prior notice to Lessor, Lessee may, at its own expense,
make alterations in or add attachments to the Property,
provided such alterations or attachments are readily removable
and do not reduce the value of the Property or interfere with
the normal and satisfactory operation or maintenance of the
Property. All such alterations and attachments shall be and
become the property of Lessor at the expiration or termination
of this Lease, or at the option of Lessee, shall be removed
and retained by Lessee provided the Property is restored, at
Lessee's expense, to its original condition, reasonable wear
and tear only excepted.
c. So long as Lessee is not in default hereunder, Lessor shall
not interfere with Lessee's use or possession of the Property
during the Lease Term.
d. The Lessee shall keep the Property free and clear from all
claims, levies, liens, encumbrances and process whatsoever
other than those arising by, through or under Lessor. The
Lessee shall give the Lessor immediate notice of any such
attachment or other judicial process affecting all or any part
of the Property and take all such action as may be necessary
to promptly remove the same.
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e. The Lessee shall not sublet or part with possession of the
Property or any part thereof or attempt in any other manner to
dispose of the Property or transfer or assign its rights under
this Lease without the prior consent of Lessor. No such
purported assignment, sublease or other parting with
possession of the Property shall relieve Lessee of its
liabilities and obligations under this Lease.
f. The Lessee shall use, maintain and operate the Property so as
to comply with all laws, rules and regulations (domestic or
foreign) applicable thereto and shall obtain all governmental
permits, licenses and approvals required in connection
therewith. In case any additional or other equipment,
appliance or alteration is required to be made or installed on
any item of Property in order to comply with such laws,
regulations, requirements and rules, Lessee agrees to make or
install such equipment, appliance or alteration at its own
cost and expense. To the extent that Lessee agrees to comply
with foreign laws, rules and regulations, nothing shall be
understood as an agreement by Lessee to take any action or
refrain from taking any action that would violate any law of
the United States of America or that would subject Lessee to
penalties under the law of the United States of America.
x. Xxxxxx acknowledges and recognizes that Lessee owns and
operates its own drilling rigs ("Lessee's Rigs") in addition
to the Drilling Rigs. Lessee shall have no obligation to use
the Drilling Rigs in its drilling operations in preference to
Lessee's Rigs and shall have no obligation to obtain premium
rates for the Drilling Rigs or to use the Drilling Rigs in
preference to Lessee's Rigs for operations paying premium
rates. At all times during the Lease Term, Lessee shall, in
its sole discretion, have the right to determine whether to
use Drilling Rigs or Lessee's Rigs in any of its drilling
operations with no obligation to account to Lessor in any way.
6. DISCLAIMER OF WARRANTY. LESSOR MAKES NO WARRANTY OF ANY KIND WHATSOEVER
WITH RESPECT TO THE PROPERTY, AND ALL WARRANTIES OF QUALITY, DESIGN,
MANUFACTURE, MAINTENANCE, FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY ARE HEREBY DISCLAIMED AND EXCLUDED AND THE PROPERTY IS
PROVIDED HEREUNDER ON AN AS IS, WHERE IS BASIS.
7. Repair and Replacements. The Lessee shall maintain the Property in good
working order and shall thereafter keep and maintain the Property in
good condition and working order and, at its own cost and expense, make
all repairs, adjustments and replacements necessary for its
preservation, normal wear and tear excepted. All such replacements
shall immediately become the property of the Lessor. Lessee shall have
the right to paint the Drilling Rigs to conform to its color scheme for
rigs, but shall have the obligation to repaint the Drilling Rigs to
conform to Lessor's color scheme upon termination of the Lease Term.
8. Loss of Equipment and Insurance. Lessee shall immediately notify Lessor
of all details concerning any damage to, or loss of, the Property
arising out of any event or occurrence whatsoever, including but not
limited to, the alleged or apparent improper manufacture, functioning
or operation of the Property.
a. Until the Property is returned to Lessor, the entire risk of
loss, destruction or damage to the Property from any cause or
condition whatsoever shall be borne solely and exclusively by
the Lessee, and the Lease Term shall not terminate as a result
of such loss, destruction or damage except as provided below.
In the event a portion of the Property is lost, destroyed or
damaged beyond repair, or all or any portion of the Property
is damaged but not beyond repair, Lessee shall promptly repair
or replace such Property with similar oil drilling equipment
having a value and utility not less than those of the Property
or such portion thereof which is so lost, destroyed or
damaged. In the event all,
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but not part, of the Property is lost, destroyed or damaged
beyond repair, Lessee may either replace the Property as
provided above or terminate the Lease Term upon payment to the
Lessor of an amount equal to the all risk property damage
insurance required to be carried as provided in Section 8(b)
hereof. Payment of such amount to Lessor by the insurance
carrier issuing such policy or policies shall constitute
payment hereunder by Lessee. All such replacement property
shall immediately be conveyed to, and become the property of,
Lessor, free and clear of all liens, claims and encumbrances
whatsoever.
b. Until the Property is returned to Lessor, the Lessee, at its
own cost and expense, shall keep in effect with reputable
insurers acceptable to the Lessor all risk and public
liability insurance policies covering the Property and Lessor.
Such all risk coverage shall insure the Property in an amount
not less than that maintained by Lessor on the date hereof
against all risks of loss or damage from every cause
whatsoever. Such public liability insurance shall be in such
amount as is reasonably acceptable to Lessor. Evidence of such
insurance coverage shall be furnished to Lessor on the date
hereof and, from time to time, thereafter as Lessor may
demand. Such policies shall provide that no less than thirty
days' written notice shall be given Lessor prior to
cancellation of such policies for any reason. Lessee hereby
irrevocably appoints Lessor as Lessee's attorney-in-fact
coupled with an interest to make claim for, receive payment
of, and execute any and all documents that may be required to
be provided to the insurance carrier in substantiation of any
such claim for loss or damage under such all risk insurance
policy, and to endorse Lessee's name to any and all drafts or
checks in payment of the loss proceeds. All insurance policies
shall name both the Lessee and the Lessor as insured
thereunder. Each damage policy shall provide for payment of
all losses directly to the Lessor. Lessor shall remit such
amounts to Lessee upon repair or replacement of the Property
or portion thereof in respect of which such losses are paid as
provided in Section 8(a) hereof. Each liability policy shall
provide that all losses be paid on behalf of the Lessee and
the Lessor as their respective interests appear.
9. Location and Inspection. Lessee shall keep the Property in its sole
possession and control at all times. Lessor shall have the right to
inspect the Property at any time and from time to time upon reasonable
notice to the Lessee.
10. Return of the Property. Upon the expiration or termination of this
Lease, Lessee shall return the Property to Lessor at its current
location or at such other location as the parties may reasonably agree
upon. The Property shall be returned to Lessor in the same condition as
originally received by Lessee, normal wear and tear excepted.
11. Termination of the Lease. This Lease may be terminated only as follows:
a. By agreement of the parties.
b. Automatically, as to a Drilling Rig, in the event of the total
destruction of that Drilling Rig.
c. By Lessor in the event of a default as defined in Article 12
below.
d. Automatically at the end of the Lease Term.
e. By Lessee by proper notice served in accordance with the
provisions of Article 2(a).
12. Events of Default and Remedies. The occurrence of any one of the
following shall constitute as Event of Default hereunder:
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a. Lessee fails to pay any installment of Rent on or before the
fifth day following the date when the same becomes due and
payable;
b. Lessee attempts to remove, sell, transfer, encumber, sublet or
part with possession of the Property or any items thereof,
except as expressly permitted herein;
c. Lessee shall fail to observe or perform any of the other
obligations required to be observed or performed by Lessee
hereunder and such failure shall continue uncured for twenty
(20) days after notice thereof to Lessee by Lessor;
d. Any representation or warranty made by Lessee herein or in any
document or certificate furnished in connection herewith shall
prove incorrect in any material respect;
e. Lessee ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its
inability to pay its debts as they become due, files a
voluntary petition in bankruptcy, is adjudicated a bankrupt or
an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under any
present or future statute, law or regulation or files an
answer admitting the material allegation of a petition filed
against it in any such proceeding, consents to or acquiesces
in the appointment of a trustee, receiver, or liquidator of it
or of all or any substantial part of its assets or properties,
or if it or its shareholders shall take any action looking to
its dissolution or liquidation; or
f. Within 30 days after the commencement of any proceedings
against Lessee seeking reorganization, arrangement,
readjustment, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, such
proceedings shall not have been dismissed, or if within 30
days after the appointment, without Lessee's consent or
acquiescence, of any trustee, receiver or liquidator of it or
of all or any substantial part of its assets and properties,
such appointment shall not be vacated.
Upon the occurrence of an Event of Default, Lessor may, at its option,
do any or all of the following: (i) by notice to Lessee terminate the
Lease as to any or all Property; (ii) whether or not the Lease is
terminated as to any or all Property, take possession of any or all of
the Property, wherever situated, and for such purpose, enter upon any
premises without liability for so doing or Lessor may cause Lessee, and
Lessee hereby agrees, to return the Property to Lessor as provided in
this Lease; (iii) recover from Lessee, as liquidated damages, and not
as s penalty, an amount equal to the present value of all monies to be
paid by Lessee during the remainder of the Lease Term, discounted at
the rate of 10% per annum, which payment shall become immediately due
and payable; and (iv) sell, dispose of, hold, use or lease any Property
as Lessee in its sole discretion may determine without, except as
provided below, any duty to account to Lessee (and Lessor shall not be
obligated to give preference to the sale, lease or other disposition of
the Property over the sale, lease or other disposition of similar
property owned or leased by Lessor). In any event, Lessee, without
further demand, shall pay to Lessor an amount equal to all sums due and
payable for all periods up to and including the date on which Lessor
has declared this Lease to be in default.
In the event that Lessee shall have paid to Lessor the liquidated
damages referred to in clause (iii) above, Lessor hereby agrees to pay
to Lessee, promptly after receipt thereof, all rentals or proceeds
received from the reletting or sale of the Property during the balance
of the initial one-year term or the applicable successive one-year
period of the Lease Term (after deduction of all expenses incurred by
Lessor), said amount never to exceed the amount of the liquidated
damages paid by Lessee. Lessee agrees that Lessor shall have no
obligation to sell or lease the Property and shall not be required to
give preference to the sale, lease or to other disposition of the
Property over the sale, lease or other disposition of similar property
owned or leased by
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Lessor. Lessee shall in any event remain fully liable for reasonable
damages as provided by law and for all costs and expenses incurred by
Lessor on account of such default including, but not limited to, all
court costs and reasonable attorneys' fees. The rights afforded Lessor
hereunder shall not be deemed to be exclusive, but shall be in addition
to any rights or remedies provided by law.
13. Net Lease. Except as otherwise specifically provided in this Lease or
an Exhibit hereto, it is understood and agreed that this is a net
lease, and that, as between Lessor and Lessee, Lessee shall be
responsible for all costs and expenses of every nature whatsoever
arising out of or in connection with or related to this Lease of the
Property (including, but not limited to, transportation, transportation
insurance, rigging, drayage, packing, installation and mobilization and
demobilization charges). Lessee hereby agrees that, in the event that
Lessee fails to pay or perform any obligation under this Lease, Lessor
may, at its option, pay or perform said obligation and any payment made
or expense incurred by Lessor in connection therewith shall become
additional rent which shall be due and payable by Lessee upon demand.
14. Indemnification. Lessee hereby agrees to assume liability for, and does
hereby agree to indemnify, defend, protect, save and keep harmless
Lessor and its respective successors, assigns, legal representatives,
agents, officers, directors and employees, from and against, any and
all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Lessor or any of its respective
successors, assigns, legal representatives, agents officers, directors
and employees (whether or not also indemnified against by the
manufacturer(s) or any other person), in any way relating to or arising
out of this Lease or any document contemplated hereof, or the
performance or enforcement of any of the terms hereof, or in any way
relating to or arising out of the lease, ownership, possession, use,
condition, operation, sale or other disposition of the Property by
Lessee or any accident in connection therewith (including, without
limitation, latent and other defects, whether or not discoverable);
provided, however, that Lessee shall not be required to indemnify
Lessor or its respective successors, assigns, legal representatives,
agents, and servants, for loss or liability in respect of any item or
Property arising from acts or events which occur after possession of
such item of Property has been returned to Lessor or loss or liability
resulting from the willful misconduct of Lessor. Lessee agrees that
Lessor shall not be liable to Lessee for any liability, claim, loss,
damage or expense of any kind or nature arising in strict liability or
caused directly or indirectly by the inadequacy of the Property for any
purpose or any deficiency or defect therein or the use or maintenance
thereof or any repairs, servicing or adjustments thereto or any delay
in providing or failure to provide any thereof or any interruption or
loss of service or use thereof or any loss of business or any other
consequential damages.
15. Severability. Any provisions of this Agreement found to prohibited by
law shall be ineffective to the extent of such prohibition without
invalidating the rest of this Agreement so long as the economic or
legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party hereto.
16. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Texas applicable to
contracts made and to be performed wholly within the State of Texas.
17. Entire Agreement. This Agreement contains the entire understanding of
the parties, and such understanding may not be modified or terminated
except in writing signed by the Parties and by any proper sublessee or
assignee.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
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19. Notices. All notices or other communications hereunder shall be in
writing and shall be delivered personally, by telecopy or overnight
delivery service or mailed, by registered or certified mail, postage
prepaid, to the party for which it is intended at its address set forth
below or to such other address as such party shall furnish to the other
party by notice hereunder.
If to Lessee:
Xxxxxx Drilling USA, Inc.
000 X. Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy No.: 281.775.8147
If to Lessor:
Bayard Drilling, L.P.
000 X. Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy No.: 281.775.8431
20. No Waiver. No waiver of any of the terms and conditions hereof shall be
effective unless in writing and signed by the party against whom such
waiver is sought to be enforced. Any waiver of the terms hereof shall
be effective only in the specific instance and for the specific purpose
given. The waiver by Lessor or Lessee of any breach of any obligation
of Lessee or Lessor shall not be deemed a waiver of such obligation or
of any subsequent breach of the same or any other obligation. The
subsequent acceptance of rental payments hereunder by Lessor shall not
be deemed a waiver of any prior existing breach by Lessee regardless of
Lessor's knowledge of such prior existing breach at the time of
acceptance of such rental payments. The rights afforded Lessor and
Lessee under this Section 20 shall not be deemed to be exclusive, but
shall be in addition to any rights or remedies provided by law.
21. Binding Effect. The provision of this Agreement shall be binding upon
and inure to the benefit of both parties and their respective legal
representatives, successors, and permitted assigns.
22. Amendment. This Lease may be modified only by mutual agreement of the
parties in writing.
23. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Lease or the breach, termination or invalidity thereof
shall be settled by arbitration in accordance with the rules of the
American Arbitration Association. The number of arbitrators shall be
three and the place of arbitration shall be at Houston, Texas.
24. Third Party Beneficiary. Nothing in this Lease is attended to or shall
be construed as to create any third party beneficiary to this Lease or
otherwise confer any right in or upon any persons except the parties
hereto and the respective permitted assigns.
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IN WITNESS WHEREOF, the Lessor and Lessee each have caused this Lease
to be duly executed by their duly authorized officers, effective as of the day
and year first above written.
XXXXXX DRILLING USA, INC.
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By: Xxxxx X. Xxxxx
Title: President
BAYARD DRILLING, L.P.
By: BAYARD DRILLING, L.L.C.
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By: Xxxxxx XxXxxxxxx
Title: Manager
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