THIS AGREEMENT is made this 19 day of November, 1999
BETWEEN:
(1) XXXX XXXXX ENERGY ASA of Xxxx Olsens gate 2, 0152 Oslo,
Norway, Oslo, Norway ("FOE")
(2) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION ("GMIDC") for and on
behalf of Nelstar Leasing Company Limited (the "Owner") and:
(3) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION acting on its own
behalf ("GMIDC")
BACKGROUND
(A) The Owner and Xxxxxxx and Xxxxx Shipbuilding and Heavy Industries Limited
(the "Builder") are parties to a shipbuilding contract originally entered
into on 27 February 1998 between GMIDC and the Builder, as amended and
as novated from GMIDC via a novation to Global Marine Leasing Corporation
to the Owner.
(B) By an Amendment No. Three to the said Shipbuilding Contract made or to
be made between the Builder and the Owner, it was or will be agreed
that the Owner should make certain payments to the Builder, such
payments to be made on a without prejudice basis and subject to the
Owner's right to be repaid upon any arbitration award against the
Builder pursuant to the said Shipbuilding Contract.
(C) FOE is the ultimate majority shareholder of the Builder.
(D) It is a condition of the Owner's obligations under Amendment No.
Three referred to above that FOE enters into this Agreement, and this
Agreement is entered into by FOE in consideration of the foregoing.
1 DEFINED TERMS
1.1 In this Agreement words and expressions which are defined in the
Shipbuilding Contract shall have the meanings given to them therein.
In addition the following words and expressions shall have the
meanings set out below:
"Amendment No. Three" means the Amendment No. Three to the Shipbuilding
Contract first referred to in Recital (B);
"Shipbuilding Contract" means the contract first referred to in (A)
above including the Amendment No. Three referred to in (B) above, as
the same has been, or may from time to time further be, novated,
supplemented, amended or varied.
"Warranty Obligations" means the obligations of the Builder under
Clause 16 of the Shipbuilding Contract;
1.2 Clause headings are for ease of reference only and shall not affect the
construction of this Agreement.
2 SUPPORT UNDERTAKING
2.1 Subject to the Owner not being in default in the performance of its
obligations under (i) Clause 8.3 of the Shipbuilding Contract (as inserted
by Amendment No. Three) and (ii) Clause 2.4 of this Agreement, FOE
undertakes to the Owner to provide to the Builder from time to time any
additional funding required by the Builder to enable the Builder
expeditiously, diligently and (except over the Christmas holiday period)
continuously to complete the Vessel at the Builder's Queens Island
shipyard in accordance with the terms of the Shipbuilding Contract. If
FOE breaches its obligations under this Clause 2.1 the Owner shall have
the right (but not the obligation) to make the corresponding payments to
the Builder and the damages for breach payable by FOE to the Owner shall
comprise (and be limited to) any such payments so made by the Owner.
FOE's obligations to put the Builder in funds pursuant to this Clause 2.1
shall cease upon the Owner exercising its rights under Clause 15.2(ii) of
the Shipbuilding Contract (but without prejudice to FOE's liability for
any breach of its obligations under this Clause 2.1 which occurs before
such time). FOE undertakes with the Owner to perform the equivalent
agreement with the Owner of Hull No. 1740 in accordance with its terms
(but the Owner acknowledges that only the owner of Hull No. 1740 or any
party entitled under Clause 9 of that agreement shall be entitled to
enforce that agreement).
2.2
(a) If the Owner believes that FOE is not in compliance with its obligations
under Clause 2.1 the issue shall be immediately referred to a panel of
experts (the "Panel") consisting of one member appointed by the Owner, one
member appointed by FOE and an independent third party. The Panel shall
determine if FOE is or is not complying with its obligations under Clause
2.1 in accordance with their terms and the decision of the Panel shall
be final (it acting as an expert and not as an arbitrator). A
determination by the Panel shall be by majority vote. If the Owner or FOE
fails to appoint its member, the decision of an independent third party
shall be deemed to be a determination by the Panel.
(b) FOE will procure that the Builder provides to the Panel (on a confidential
basis) all information required by the Panel for the purposes of any
determination. The parties shall co-operate in good faith to ensure that
each determination by the Panel is made expeditiously (and, in any event,
within 5 Belfast working days of an issue being referred to it).
(c) A failure by FOE to fund the Builder following a determination by the Panel
that it is obliged to do so shall constitute a breach of Clause 2.1.
(d) The failure by the Builder to complete the Vessel by the date referred to
in Clause 2.4(b)(ii) of Amendment No. Three shall not per se evidence a
breach by FOE of its obligations under Clause 2.1.
(e) If the Owner and FOE are unable to agree on the identity of the
independent third party member of the Panel before any matters require
determination by the Panel he shall be appointed by the President for the
time being of the Royal Institute of Naval Architects.
2.3
(a) Subject to the Owner not being in default in the performance of its
obligations under (i) Clause 8.3 of the Shipbuilding Contract (as inserted
by Amendment No. Three) and (ii) Clause 2.4 of this Agreement, FOE
undertakes to the Owner to provide to the Builder any additional funding
required by the Builder in the absence of which the Builder would be
unable to comply with the Warranty Obligations.
(b) The total liability of FOE under (i) this Clause 2.3 (as determined in
accordance with the following provisions of this Clause 2.3) and (ii)
Clause 2.3 of the equivalent agreement in respect of Hull No. 1740 shall
in no circumstances whatsoever exceed in aggregate the amount of
Pounds-Sterling 3,000,000.
(c) For the purposes of determining the amount of FOE's liability under this
Clause 2.3 (other than in the circumstances described in Clause 2.3(d))
only the direct and necessary costs of the Builder incurred in complying
with the Warranty Obligations shall be taken into account as amounts for
which FOE is, subject always to Clause 2.3(b), liable to fund the Builder.
(d) If the Owner exercises its rights under Clause 16.6 of the Shipbuilding
Contract FOE's liability shall, in addition to any liability under Clause
2.3(a) but subject always to Clause 2.3(b), be an amount equal to that for
which the Builder is expressed to be liable under Clause 16.6 of the
Shipbuilding Contract. The liability of FOE under this Clause 2.3(d)
shall, subject always to Clause 2.3(b), be joint and several with
that of the Builder under Clause 16.6 of the Shipbuilding Contract.
2.4 The Owner agrees to make further payments to the Builder for use
exclusively on the completion of the Vessel in accordance with the
Shipbuilding Contract subject to and upon the following terms and
conditions:
(a) such further payments shall be made by the Owner subject to and conditional
upon:
(i) the Owner's and the owner of Hull No. 1740's aggregate liability of
Pounds-Sterling 57,000,000 under the Further Amount Amendment made by
Amendment No. Three and the equivalent provision of the Hull 1740
Agreement having been used in full;
(ii) the Builder providing the Owner, not later than 10 Belfast working
days after the end of each calendar month and in form and substance
satisfactory to the Owner (acting reasonably), a statement of monetary
liabilities incurred by the Builder in performing its obligations
under the Shipbuilding Contract and the shipbuilding contract for
Hull No. 1740 since the date of the last such certificate or (in
the case of the first such certificate) the date of this
Agreement;
(iii)the aggregate cost of completing the Vessel in accordance with the
Shipbuilding Contract and the cost of completing Hull No. 1740 in
accordance with its Shipbuilding contract shall exceed the Contract
Price for the Vessel and the Contract Price for Hull No. 1740 plus
agreed Project Change Orders under each contract by more than
Pounds-Sterling 122,000,000, as determined in accordance with Clause
2.5;
(iv) on each occasion on which the Owner is to make a payment pursuant to
this Clause 2.4, FOE making a payment to the Builder of an equal
amount for use exclusively on the completion of the Vessel in
accordance with the Shipbuilding Contract;
(v) FOE not being in breach of any of its obligations under this
Agreement;
(vi) the Owner not having exercised its rights under Clause 15.2(ii) of
the Shipbuilding Contract and the owner of Hull No. 1740 not having
exercised its equivalent rights.
(b) the Owner's liability to make payments under this Clause 2.4 shall in no
circumstances whatsoever exceed, when aggregated with equivalent payments
made by the owner of Hull No. 1740 pursuant to Clause 2.4 of that owner's
agreement with FOE, Pounds-Sterling 8,000,000.
2.5 A determination of the circumstances referred to in Clause 2.4 (a) (iii)
(a "Specified Cost Overrun") shall be conclusively determined by a
certificate from KPMG (auditors to the Builder), provided that:
(a) if the CFO of Global Marine Inc. and the CFO of FOE agree that a Specified
Cost Overrun has occurred or is likely to occur and that the Builder
requires cash to complete the Vessel and Hull No. 1740, the Owner and FOE
shall be obliged to make payments in accordance with Clause 2.4 before the
issue of the KPMG Certificate to the extent necessary to satisfy such cash
requirement (subject always to the limit referred to in Clause 2.4 (b));
(b) if one or other but not both of the CFO's of Global Marine Inc. and FOE
believes (acting reasonably) that the circumstances referred to in
sub-clause (a) apply the matter shall be referred to the Panel referred to
in Clause 2.2 and a determination by the Panel that such circumstances do
apply shall oblige the Owner and FOE to make payments as referred to in
sub-clause (a) above;
(c) if, upon issuance of the KPMG Certificate the Specified Cost Overrun is
less than the aggregate amount paid by the Owner and FOE pursuant to
sub-clauses (a) and/or (b) above FOE shall forthwith be obliged to make an
adjusting payment to the Owner to put the Owner in the position it would
have been in had this Clause 2.5 operated without reference to this
proviso.
3 FURTHER UNDERTAKINGS
Subject to the Owner not being in default of the performance of its
obligations under (i) Clause 8.3 of the Shipbuilding Contract (as
inserted by Contract Amendment Number Three) and (ii) Clause 2.4 of
this Agreement, FOE hereby further undertakes with the Owner that until
Delivery FOE will:
(a) maintain the Builder as its indirect, majority owned subsidiary;
(b) save in circumstances in which the Owner has exercised its rights
under Clause 15.2(ii) of the Shipbuilding Contract, ensure that
the Builder is not (i) made subject to any receivership,
administrative receivership, administration, voluntary
arrangement or liquidation proceedings (other than as may be
initiated by the Owner or any company in the Global Marine group)
or (ii) otherwise insolvent;
(c) provide, and procure that the Builder shall provide, to the Owner
such financial or other information as the Owner (or GMIDC on
behalf of the Owner) shall reasonably require in order to
demonstrate compliance by FOE with its undertakings set out at
this clause 3.
4 INTEREST
FOE irrevocably and unconditionally undertakes to pay to the Owner on
demand interest on any amount due under this Agreement and remaining
unpaid (as well after as before any judgment or arbitration award) at the
rate of LIBOR plus 2 percent.
5 NATURE OF OBLIGATIONS
FOE's obligation to make payments under this Agreement shall be
absolute and unconditional under any and all circumstances and shall
not be subject to any right of set off or counterclaim. The
obligations of FOE under this Agreement shall not be affected by, nor
shall FOE be discharged or have any claim against the Owner or GMIDC
arising out of, any matter or thing which might, but for this
provision, operate to affect such obligations, or give rise to such
discharge or claim.
6 PAYMENTS
6.1 All payments to be made by FOE under this Agreement shall be made in
full without set-off or counterclaim in immediately available funds and
free and clear of all taxes levies and other charges. If FOE is
obliged by law to deduct any tax or make any other deduction or
withholding from any such payment FOE shall increase such payment so
that the Owner receives the amount it would have received had no such
deduction or withholding been necessary.
6.2 If following the making of any increased payment by FOE pursuant to
Clause 6.1 the Owner receives or is granted a credit against, remission
for or repayment of any increased payment made by FOE the Owner shall:
(a) give to FOE a certificate setting out the basis of the computation of
the amount of any credit, remission or repayment referred to in this
Clause 6.2; and
(b) to the extent that it is satisfied that it can do so without prejudice
to the retention of such credit, remission or repayment, promptly
reimburse FOE with such amount as the Owner shall determine and certify
to FOE (such determination as so certified to be conclusive in the
absence of manifest error) to be such proportion of such credit,
remission or repayment as will leave the Owner, after such
reimbursement, in the same net after tax position as it would have been
in had no such deduction or withholding been required to be made,
Provided that:
(i) the Owner shall be the sole judge (acting in good faith) of the
amount of any such credit, remission or repayment and of the date
on which it is received;
(ii) the Owner shall have an absolute discretion as to the order and
manner in which it employs or claims tax credits and allowances
available to it;
(iii)the Owner shall not be obliged to disclose to FOE any information
regarding the tax affairs or tax computations.
6.3 If any sum due from FOE to the Owner under this Agreement or under any
order or judgment relating to this Agreement has to be converted from
the contractual currency into another currency, FOE shall indemnify the
Owner against the loss arising when the amount of the payment actually
received by the Owner is converted into the contractual currency at the
rate of exchange reasonably available to the Owner. This clause 6.3
creates a separate liability of FOE which is distinct from its other
liabilities under this Agreement and which shall not be merged in any
judgment or order relating to those other liabilities.
7 WARRANTIES
FOE hereby warrants to the Owner that it has full power to enter into and
perform its obligations under this Agreement and that this Agreement has
been validly created, constitutes binding and enforceable obligations of
FOE and does not conflict with any law or regulation binding on FOE or the
Builder or with any contract to which FOE or the Builder is respectively a
party.
8 NOTICES
8.1 All notices or other communications under this Agreement shall be in
writing. Any such notice will be deemed to be given as follows:
(i) if by letter, when delivered; and
(ii) if by facsimile, when a positive transmission report is received.
However, a notice given in accordance with the above but received on a
non-business day or after business hours in the place of receipt will only
be deemed to be given on the next such business day.
8.2 The address and facsimile number of each party to this Agreement for all
notices under this Agreement are as follows:
(a) FOE Xxxx Xxxxx Energy XXX
Xxxx Xxxxxx xxxx 0
0000 Xxxx
Xxxxxx
Fax No. 00 00 00 00 00 00
Attention: Xxx X. Gjortz
the Owner Nelstar Leasing Company Limited
Great Xxxxxx Xxxxx
000 Xxxxxxxxxxx Xxxx
Xxxxxxx
Fax: x(00) 000 000 0000
Attention: Company Secretary
With copies to:Global Marine International Drilling Corporation
Xxxxxxxxxx 00
0000 XX Xxx Xxxx
Xxx Xxxxxxxxxxx
Fax: (0000) 00 000 000
Attention: Mr Xxxxx Xxxxxx
and
Global Marine Inc.
000 X. Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (0) 000 000 0000
Attention: General Counsel
and
Global Marine Drilling Company
000 X. Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (0) 000 000 0000
Attention: Xxxx X. Xxxxxxx
(Manager Construction and Marine Projects)
9 ASSIGNMENT: THIRD PARTY RIGHTS
9.1 The Owner may assign or transfer all or any part of its rights under this
Agreement to GMIDC or any other company in the Global Marine group.
9.2 As an alternative to taking rights by assignment, GMIDC and any other
member of the Global Marine group shall have the right to enforce FOE's
obligations under this Agreement. In connection with this:
(a) GMIDC acknowledges on behalf of itself and each other member of the
Global Marine group its reliance on this clause 9.2;
(b) FOE shall not be liable to pay more than once the amounts due from
FOE under this Agreement;
(c) this Agreement shall not be amended, varied or waived by the Owner
without the prior written consent of GMIDC.
9.3 In the absence of any assignment (pursuant to Clause 9.1) or the exercise
of rights by any party as third party beneficiary (pursuant to Clause 9.2)
GMIDC shall, until the Owner notifies FOE to the contrary, be entitled to
exercise all rights under this Agreement on behalf of the Owner.
9.4 FOE, GMIDC (on its own behalf and not on behalf of the Owner) and the Owner
each agree that if at any time the Owner shall serve a Put Notice under
and in accordance with the Put Option Agreement, then, automatically and
without the need for the Owner to take any further action, the following
provisions of this Clause 9.4 shall have effect:
(i) the Owner shall be treated as having released and discharged FOE from
all its obligations, liabilities, claims and demands (past present
and future) under this Agreement as from time to time amended and
supplemented (other than this Clause 9.4);
(ii) the Owner shall be treated as having been released and discharged
from all obligations, liabilities, claims and demands, (past, present
and future) under this Agreement as from time to time amended and
supplemented;
(iii)GMIDC (in its own right and not on behalf of the Owner) shall be
treated as having the benefit of all of the Specified Rights to the
exclusion of the Owner and FOE shall be treated as assuming towards
GMIDC in its own right all obligations and liabilities corresponding
to the Specified Rights; and
(iv) GMIDC shall be treated as having assumed all of the Specified
Obligations (including, without limitation, the obligation to make
all payments otherwise payable by the Owner under this Agreement) and
FOE shall be treated as having the benefit of all rights and claims
corresponding to the Specified Obligations.
such that, with effect from the Further Novation Time and regardless of
any non-compliance with any of the terms of this Agreement, this Agreement
(other than this Clause 9.4) shall cease to have effect as between FOE and
the Owner.
9.5 Where a Put Notice is issued, on the Settlement Date in respect thereof
GMIDC shall make a payment to the Owner equal to the aggregate of all
payments previously made by the Owner to FOE under this Agreement (and
which have not otherwise been effectively reimbursed to the Owner by
GMIDC or other members of the Global Marine group).
9.6 Clause 6.1 of the Put Option Agreement shall apply to GMIDC's obligations
under Clause 9.5 as it applies to the obligations of the Put Party under
the Put Option Agreement.
9.7 For the purposes of this Clause 9:
(i) the term "Further Novation Time" shall mean the time at which a Put
Notice is served;
(ii) the term "Put Notice" shall have the meaning given to it in the Put
Option Agreement;
(iii)the term "Put Option Agreement" shall mean the Put Option Agreement
dated 9th December 1998 between the Builder, the Owner and the Put
Party;
(iv) the term "Put Party" shall mean Global Marine X.X. Xxxxx Limited;
(v) the term "Settlement Date" means the day falling ten (10) Working
Days (as defined in the Put Option Agreement) after the date on which
the Further Novation Time falls, provided that if a Termination Event
has occurred and is continuing under the Lease (as defined in the Put
Option Agreement) such period shall be five (5) Working Days;
(vi) the term "Specified Rights" shall mean all the rights and claims of
the Owner expressed to be granted under, or otherwise arising under,
out of or in connection with, this Agreement (excluding Clause 9.4,
9.5 and 9.6) as from time to time amended and supplemented (which
rights shall, for the avoidance of doubt, include rights corresponding
to obligations arising under this Agreement or before the Further
Novation Time including rights in respect of liabilities of FOE to
pay amounts which have then fallen due but have not been paid by
FOE); and
(vii)the term "Specified Obligations" shall mean all the obligations and
liabilities of the Owner expressed to be imposed under, or otherwise
arising under, out of or in connection with, this Agreement as from
time to time amended and supplemented (which obligations and
liabilities shall, for the avoidance of doubt, include obligations
and liabilities arising under this Agreement on or
before the Further Novation Time which have not been performed on or
before the Further Novation Time including obligations and liabilities
in respect of amounts which have then fallen due to be paid to FOE
but not paid).
10 FURTHER ASSURANCE
FOE agrees to execute such further documents as the Owner or GMIDC may
reasonably require to give full effect to this Agreement and the
benefits intended to be conferred on the Owner and GMIDC by this
Agreement. Without prejudice to the generality, such documents shall
include those, if any, necessary to give effect to Clause 9.2 as a
result of the coming into force in England of the Contracts (Rights of
Third Parties) Act.
11 CURE
Neither party shall be considered to be in default or breach of its
obligations under this Agreement (or in the case of the Owner, Amendment
No. Three) until it has been so notified by the party to whom the
obligations are owed of such default and that default remains
unremedied for 3 Belfast working days.
12 COUNTERPARTS
This Agreement may be executed by the parties in several counterparts
so that such counterparts taken together and executed by both parties
shall constitute the same document.
13 LAW AND ARBITRATION
Clause 20 of the Shipbuilding Contract shall apply to this Agreement as if
set out in full with any necessary amendments.
IN WITNESS whereof this Agreement has been executed and delivered as a Deed by
FOE and signed on behalf of the Owner on the date at the beginning of this
Agreement.
SIGNED by )
Xxxxxx Xxxxxxx ) /s/Xxxxxx Xxxxxxx
)
for and on behalf of )
XXXX XXXXX ENERGY ASA )
SIGNED by )
Xxxxx Xxxxxxx ) /s/ Xxxxx Xxxxxxx
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on )
behalf of Nelstar Leasing
Company )
Limited )
SIGNED by )
Xxxxx Xxxxxxx ) /s/ Xxxxx Xxxxxxx
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on its)
own behalf )
