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EXHIBIT 10.40
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OVERALL AGREEMENT
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1 February 2001
between
SANTA FE INTERNATIONAL CORPORATION
- and -
PPL SHIPYARD PTE. LTD.
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THIS OVERALL AGREEMENT is made on February 1, 2001,
BETWEEN:
(1) SANTA FE INTERNATIONAL CORPORATION, organized and existing under the
laws of the Cayman Islands with offices at 0000 XXX Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, X.X.X. ("SFIC"); and
(2) PPL SHIPYARD PTE. LTD., organized and existing under the laws of
Singapore, having its principal place of business located at 00 Xxxxxx
Xxxx, Xxxxxxxxx 000000 (hereinafter called the "Builder").
WHEREAS:
A. Pursuant to two (2) contracts of even date herewith between SFIC and
the Builder, each for the construction and sale of one xxxx-up drilling
unit (collectively the "Contracts"), SFIC and the Builder have agreed
that the Builder shall design, construct, equip, complete and deliver
two (2) Freide and Xxxxxxx JU2000 xxxx-up drilling units to bear the
Builder's hull numbers 2001 and 2002 (each being referred to herein as
a "Vessel" and collectively as the "Vessels"); and
B. The parties hereto desire to enter into a further agreement to
co-ordinate certain aspects of the performance of the Contracts and to
provide for the granting by the Builder to SFIC of purchase options in
respect of four (4) further Xxxxxx and Xxxxxxx JU2000 xxxx-up drilling
units.
NOW THEREFORE, in consideration of the mutual promises and covenants herein set
forth it is hereby agreed as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Terms employed herein shall bear the same meaning as in the Contracts
and the Specifications (as defined therein).
1.2 In the event of any conflict between the provisions of this Overall
Agreement and the Contracts, the provisions of this Overall Agreement
shall prevail.
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2. GRANT OF PURCHASE OPTIONS FOR SUBSEQUENT UNIT(S)
2.1 In consideration of the payment by SFIC to the Builder of the sum of
Ten United States Dollars (U.S.$10.00), receipt of which is hereby
acknowledged, the Builder hereby grants to SFIC certain options (herein
respectively the "Options") to require the Builder to design,
construct, equip, complete and deliver to SFIC up to four (4) optional
Xxxxxx and Xxxxxxx JU2000 xxxx-up drilling units (the "Option Vessels")
as further set out below.
2.2 The Options shall be exercisable, either collectively or individually,
by SFIC serving a notice or notices on the Builder to such effect on or
before 5:00 p.m. Central Standard Time on the applicable Option
Deadline noted below. The Builder covenants and unconditionally and
irrevocably undertakes with SFIC that it will forthwith thereupon enter
into a contract or contracts with SFIC (or any other company nominated
and guaranteed by SFIC) for the design, construction, equipment,
completion and delivery to SFIC (or such other company) of such of the
Option Vessels for which SFIC shall have exercised its option as
aforesaid.
2.3 The contracts (including contract specifications) in respect of the
Option Vessels shall be in the same form mutatis mutandis as the
contract for construction and sale of Builder's Hull No. 2001 except as
otherwise expressly stipulated by this Overall Agreement and provided
that the Option Deadlines, Construction Commencement Dates, Contract
Prices and Delivery Dates for the same will be as follows:
XXXX-UP OPTION CONSTRUCTION CONTRACT DELIVERY
DEADLINE COMMENCEMENT DATE PRICE DATE
------------------- ----------------- --------------- ---------------
First Option Vessel Payment due date 1 February 2003 U.S.$72,515,250 1 February 2005
for third
installment for
second firm Vessel.
Second Option Vessel Payment due date 1 February 2004 U.S.$72,629,000 1 February 2006
for third
installment for
First Option Vessel.
Third Option Vessel Payment due date 1 February 2005 U.S.$78,476,900 1 February 2007
for third
installment for
Second Option
Vessel.
Fourth Option Vessel Payment due date 1 February 2006 U.S.$78,676,900 1 February 2008
for third
installment for
Third Option Vessel.
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The Contract Price for each of the Third and Fourth Option Vessels
shall be the lesser of the Contract Prices stated above or an amount
calculated as follows:
For the Third Option Vessel $75,159,000 + F1 + F2
For the Fourth Option Vessel $76,414,000 + F1 + F2
Where:
F1 = $72,650,000 x 0.38 x ((*US Dollars per Euro/0.94)-1);
F2 = $72,650,000 x 0.18 x ((**Japan Base Steel Price/$320 per
metric ton)-1);
and the combined value of F1 and F2 shall never be less than zero (0).
* The average of the Buying and Selling exchange rate as
quoted in the London Financial Times as of the date when the
Vessel Option is exercised by SFIC.
** The U.S. Dollar price for Japanese Steel Plate (Export) as
published in the Metal Bulletin Research ("MBR") publication
"Steel Markets Monthly" for the month when the Vessel Option
is exercised by SFIC.
The baseline reference date shall be February 1st 2001,
therefore, the baseline reference price shall be U.S.$320;
as published in the February 2001 edition of MBR Steel
Markets Monthly.
In addition, the Contract Prices for the Third and Fourth Option
Vessels will be subject to further adjustment as agreed by and among
SFIC, Builder and Freide & Xxxxxxx to reflect changes in Freide &
Xxxxxxx'x
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prices for services and equipment for the Third and Fourth Option
Vessels arising from the change in the exchange rate between the U.S.
Dollar and the Euro.
The above-referenced Contract Prices shall be reduced by Xxx Xxxxxxx
Xxxx Xxxxxxx Xxxxx-Xxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (U.S.$1,452,000)
in respect of each Vessel for which SFIC elects to reduce the Vessel's
leg length by fifty-six (56) feet should SFIC give notice of such
election to Builder no later than ninety-one (91) calendar days after
the Construction Commencement Date for such Vessel. Should SFIC give
the Builder later notice at any time up until the last fifty-six (56)
feet of the leg sections begin to be installed on the Vessel, then the
Contract Price shall be reduced by Seven Hundred Two Thousand United
States Dollars (U.S.$702,000) and SFIC shall have ownership of the leg
chord material with Builder having ownership of the leg bracing
material.
The above referenced Delivery Dates shall be accelerated in respect of
any one or more of the Option Vessels by two (2) months should SFIC so
elect by giving notice of such election to Builder no later than the
Construction Commencement Date and shall be accelerated by an
additional three (3) months (for a total of five (5) months) should
SFIC so elect by giving notice to Builder no later than three (3)
months before the Construction Commencement Date, always providing:
(1) In the event SFIC gives Builder notice no later than three (3)
months before the Construction Commencement Date, then SFIC's
first installment payment of the Contract Price to Builder
shall be due upon the second banking day next following either
the date SFIC gave Builder notice or the date of Builder's
delivery of the performance bond (but not the letter of
credit) to SFIC as required under Article XI, paragraph 2 of
the contract, whichever occurs later. Builder will provide the
letter of credit to SFIC on or before the Construction
Commencement Date.
(2) In the event SFIC gives Builder notice no later than three (3)
months before the Construction Commencement Date and SFIC
subsequently exercises its right to terminate for its
convenience before the Construction Commencement Date under
Article XI, Paragraph 4 of the contract, then SFIC shall pay
Builder its documented third party cancellation costs less any
installment payments made by SFIC to Builder. Should the
Installment Payments be greater than the cancellation costs,
then the balance shall be promptly returned to SFIC.
(3) The payment reduction specified in Article III, Paragraph 1(c)
of the contract, shall not apply unless the delivery of the
Vessel is delayed by more than sixty-one (61) calendar days
after the Delivery Date in respect of such Vessel.
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2.4 Notwithstanding the Option Deadlines, Construction Commencement Dates,
Contract Prices and Delivery Dates specified in Clause 2.3 above, SFIC
shall have the right, at its election, exercisable upon submission of
written notice to Builder by the applicable Option Deadline set forth
below, to require Builder to commence construction and deliver any one
or more of the Option Vessels under an Accelerated Schedule as follows:
CONSTRUCTION
JACKUP OPTION COMMENCEMENT CONTRACT DELIVERY
DEADLINE DATE PRICE DATE
-------------- -------------- ------------- ---------------
First Option Vessel 1 August 2002 1 August 2002 US$72,515,250 1 June 2004
Second Option Vessel 1 August 2003 1 August 2003 US$72,629,000 1 June 2005
Third Option Vessel 1 January 2004 1 January 2004 US$78,476,900 1 November 2005
Fourth Option Vessel 1 January 2005 1 January 2005 US$78,676,900 1 November 2006
Should SFIC elect to take delivery of the Third Option Vessel and/or the
Fourth Option Vessel under the Accelerated Schedule, then the Contract Price for
the Vessel(s) in respect of which SFIC so elects shall be the lesser of the
Contract Prices stated above or an amount calculated as follows:
For the Third Option Vessel $74,104,000 + F1 + F2
For the Fourth Option Vessel $75,359,100 + F1 + F2
Where:
F1 = $72,650,000 x 0.38 x ((*US Dollars per Euro/0.94) - 1);
F2 = $72,650,000 x 0.18 x ((**Japan Base Steel Price/$320 per
metric ton) - 1);
and the combined value of F1 and F2 shall never be less than zero (0).
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* An average of the Buyer and Selling exchange rate as quoted
in the London Financial Times as of the date when the Vessel
Option is exercised by SFIC.
** The U.S. Dollar price for Japanese Steel Plate (Export) as
published in the Metal Bulletin Research ("MBR") publication
"Steel Markets Monthly" for the month when the Vessel Option
is exercised by SFIC.
The baseline reference date shall be February 1st 2001,
therefore, the baseline reference price shall be U.S.$320;
as published in the February 2001 edition of MBR Steel
Markets Monthly.
In addition, the Contract Price under the Accelerated Schedule for the
Third and Fourth Option Vessels will be subject to further adjustment
as agreed between SFIC, Builder and Freide & Xxxxxxx to reflect changes
in Freide & Xxxxxxx'x prices for services and equipment for the Third
and Fourth Option Vessels arising from the change in the exchange rate
between the U.S. Dollar and the Euro.
The above-referenced Contract Prices shall be reduced by Xxx Xxxxxxx
Xxxx Xxxxxxx Xxxxx-Xxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (U.S.$1,452,000)
in respect of each Vessel for which SFIC elects to reduce the Vessel's
leg length by fifty-six (56) feet should SFIC give notice of such
election to Builder no later than ninety-one (91) calendar days after
the Construction Commencement Date for such Vessel. Should SFIC give
the Builder later notice at any time up until the last fifty-six (56)
feet of the leg sections begin to be installed on the Vessel, then the
Contract Price shall be reduced by Seven Hundred Two Thousand United
States Dollars (U.S.$702,000) and SFIC shall have ownership of the leg
chord material with Builder having ownership of the leg bracing
material.
It is agreed between SFIC and Builder that should SFIC so elect the
Accelerated Schedule, then SFIC will require in total no greater
security facilities from Builder by way of letters of credit and
performance bonds than that which would have been required should SFIC
have maintained the schedule specified in Clause 2.3. Further, the
payment reduction specified in Article III 1(c) of the contract shall
not apply unless the delivery of the Vessel is delayed more than
sixty-one (61) calendar days after the Delivery Date in respect of such
Vessel.
2.5 Notwithstanding the schedules specified in Clauses 2.3 and 2.4 above,
SFIC shall have the right to request Builder to accelerate or delay the
schedules of any one or more of the Vessels and both parties shall work
together to achieve the revised schedule, providing that any
unavoidable
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additional cost to Builder so arising shall be reimbursed by SFIC to
Builder on a documented cost basis.
2.6 Irrespective of which schedule SFIC elects, should Builder be in
default under the terms of the Contracts, or under the terms of Option
Vessel contracts or should Builder suffer delay (excepting only
Permissible Delay) which in SFIC's reasonable opinion would adversely
impact Builder's performance, then SFIC shall have the right, at no
additional cost to delay the Construction Commencement Date for any
subsequent Vessel until the default has been remedied or the delay has
been resolved to SFIC's reasonable satisfaction.
3. NOTICES
3.1 Every notice given under this Overall Agreement shall be in writing and
shall be deemed given when delivered personally, by registered or
certified mail or by facsimile/telefax to the address of the party
receiving such notice stated below. Any notice sent by telefax shall be
confirmed by prepaid first class letter posted as soon as practicable
thereafter but the failure of the addressee to receive such letter
shall not prejudice the validity or effect of such telefax notice.
3.2 Unless and until SFIC notifies the Builder to the contrary in writing,
SFIC's address designated for the purpose of notices under this Overall
Agreement shall be:
Santa Fe International Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 X.X.X.
Facsimile: 000-000-0000
Attention: Xx. X. Xxxxx Xxxxx
3.3 Unless and until the Builder notifies SFIC to the contrary in writing,
the Builder's address designated for the purpose of notices under this
Overall Agreement shall be:
PPL Shipyard Pte. Ltd.
00 Xxxxxx Xxxx
Xxxxxxxxx 000000
Facsimile: (00) 0000000
Attention: Xx. Xxx Tian Khiam
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4. LIQUIDATED DAMAGES PAYABLE BY BUILDER
The Builder hereby represents and warrants that no circumstances exist
that will cause the Singapore governmental authorities to terminate the
Builder's lease(s) for its Singapore shipyard premises while one or
more Vessels are under construction. However, the parties hereto agree
that if the Builder's rights under such lease(s) are lost or impaired
for any reason other than compulsory acquisition of such property by
Singapore governmental authorities, which loss or impairment prevents
or interferes with Builder's performance under any contract
contemplated by this Overall Agreement, including contracts for
construction of the Option Vessels, then the Builder shall pay SFIC
Fifteen Million United States Dollars (U.S.$15,000,000). It is
understood by both parties that such payment by the Builder is by way
of liquidated damages and not by way of penalty. However, the Builder
shall not be required to pay such sum if the Builder meets all of its
obligations under each contract contemplated by this Overall Agreement,
including contracts for construction of the Option Vessels, without
loss of quality at an alternative shipyard facility and at no
additional cost to SFIC. The foregoing liquidated damages shall be in
addition to and without prejudice to SFIC's rights and remedies
elsewhere set forth in the Contracts.
5. BUILDER'S UNDERTAKING NEW CONTRACTS
The Builder and SFIC recognize that nearly all of the Builder's facilities,
key personnel and other resources will likely be utilized for the work to be
performed by Builder under this Agreement and Builder agrees not to undertake
any other new construction projects of a significant value during the term of
this Agreement without the prior written consent of SFIC. Should Builder wish to
undertake such a project, Builder shall so inform SFIC in a timely manner and
SFIC shall not withhold its consent unless SFIC has good reason to believe that
the quality and/or timeliness of the work to be performed by the Builder
hereunder will be adversely affected or that Builder will not be able to perform
its obligations hereunder.
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6. GOVERNING LAW, DISPUTE AND ARBITRATION
6.1 The parties hereto agree that the validity and interpretation of this
Overall Agreement and of each Clause and part thereof shall be governed
by English law excluding, however, any of its conflicts of law rules or
other provisions which may refer to the laws of another jurisdiction.
Any claim, dispute or difference arising out of this Overall Agreement
shall be finally resolved in accordance with the provisions of Article
XVII - Dispute and Arbitration of the Contracts.
6.2 For the purposes of any proceedings pursuant to Clause 6.1 above, the
parties hereby irrevocably appoint the following as their agents within
England for the service of process:
SFIC
Xxxxx Xxxxxx
Xxxxxx Xxxxx Xxxxxxx
Bedfont Cross, Xxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxx XX00 0XX U.K.
The Builder
HFW Nominees Ltd.
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx
XX0X 0XX U.K.
7. TERM OF AGREEMENT
This Overall Agreement shall remain effective until expiry of the
warranty period for the last vessel, including any Option Vessel, built
by the Builder for SFIC as contemplated herein unless otherwise
mutually agreed in writing.
8. DEBENTURE
The Builder shall execute and deliver to SFIC the Debenture Agreement
in the form attached hereto as Exhibit "A" contemporaneously with the
execution by the Builder of this Overall Agreement and will register
the particulars of the Debenture Agreement with the Registry of
Companies and Businesses within two (2) business days after the date of
the execution of the Debenture Agreement. SFIC shall not be obligated
to make the 2nd installment payment of the Contract Price under that
certain Contract for Construction and Sale of a Xxxx-up Drilling Unit
dated on or
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about 1 February 2001 for construction of the first vessel to be
constructed by the Builder for SFIC (Hull No. 2001) until SFIC has
received evidence satisfactory to it that the Builder has executed an
assignment (the "Assignment") of the Building Agreement dated January
1, 2000, made between Jurong Town Corporation and the Builder and a
mortgage in escrow, each in such form as may be acceptable to SFIC,
together with all other documents which may be required or necessary
for the purposes of perfecting the Assignment (including the
registration of the particulars of the Assignment with the Registry of
Companies and Businesses). The Builder shall be solely responsible for
securing all governmental and other approvals and taking all other
actions as may be necessary from time to time to give full force and
effect to and maintain the terms and conditions of such Debenture
Agreement.
In this regard, the Builder hereby undertakes, represents and warrants
that it shall comply with all of the terms and conditions of the
Debenture Agreement.
9. PUBLICITY RELEASES
The provisions addressing publicity releases contained in Article XXVI
of the Contracts shall be deemed set forth herein mutatis mutandis and
shall apply equally to this Overall Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Overall Agreement to be
duly executed with effect as of the day and year first above written.
SIGNED BY )
on behalf of )
SANTA FE INTERNATIONAL CORPORATION )
in the presence of: )
SIGNED BY )
on behalf of )
PPL SHIPYARD PTE. LTD. )
in the presence of: )
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Santa Fe International Corporation undertakes, upon the request of the
Securities and Exchange Commission, to file the appendix to the foregoing
agreement that is not included in the filing.
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