As filed with the Securities and Exchange Commission on November 23,
1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November
23, 1999 (November 19, 1999)
GLOBAL MARINE INC.
(Exact name of registrant as specified in charter)
Delaware 1-5471 95-1849298
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or file number) Identification No.)
organization
777 N. Eldridge Parkway, Houston, Texas 77079-4493
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 596-5100
<PAGE>
ITEM 5. OTHER EVENTS.
On November 19, 1999, Global Marine Inc. ("GMI") and its wholly-
owned subsidiary, Global Marine International Drilling Corporation
("GMIDC"), entered into agreements with Harland and Wolff
Shipbuilding and Heavy Industries Limited regarding the terms under
which the shipbuilder will complete two new dynamically-positioned,
ultra-deepwater drillships. The drillships, the GLOMAR C.R. LUIGS
and the GLOMAR JACK RYAN, are being built for leasing subsidiaries
of Lloyds Bank Plc and Barclays Bank Plc (the "Lessors"),
respectively, at Harland and Wolff's yard in Belfast, Northern
Ireland. GMIDC acts as construction supervisor on behalf of the
Lessors, and subsidiaries of GMI have entered into 20-year leases
of the rigs. Because GMI and GMIDC were concerned about Harland
and Wolff's financial viability, they agreed to provide additional
funding to the shipbuilder to ensure completion of the two
drillships, in exchange for certain assurances by the shipbuilder
and its parent.
Under the terms of the new agreements, the Lessors are releasing
two cash collateralized letters of credit, giving Harland and Wolff
access to $40 million of its own funds. In addition, GMIDC will
advance to the shipbuilder, without prejudice to any issues of
liability under the shipbuilding contracts, Pounds-Sterling 57
million ($93 million) above the drillships' $315 million contract
price, to be paid in scheduled amounts over the next three months,
and will also advance amounts equal to half of subsequent cost
overruns until GMIDC's advances under the new agreements reach
Pounds-Sterling 65 million ($106 million). If the maximum advances of
Pounds-Sterling 65 million are made, the shipbuilder's parent, Fred. Olsen
Energy ASA, has agreed to provide all additional funds necessary to keep
the shipbuilder working in an expeditious and diligent manner and
to enable it to deliver the two completed drillships. In addition,
the parent will guarantee up to Pounds-Sterling 3 million ($4.9
million) of the shipbuilder's warranty with respect to the two
drillships.
The new agreements do not address Harland and Wolff's previously
reported claim for amounts in excess of the contract price, which
it now says total Pounds-Sterling 133 million ($216 million). That
claim, all but a small part of which GMI and GMIDC believe to be
totally without merit, will be resolved through arbitration, which
will ultimately determine if and to what extent the additional
amounts GMIDC is advancing under the new agreements will be
refundable by the shipbuilder.
GMI's original cash outlay projection for the two new drillships
totaled $660 million, inclusive of the $315 million Harland and
Wolff contract price. GMI now estimates that if the maximum
Pounds-Sterling 65 million ($106 million) were to be funded under the new
agreements, and if none of that amount were to be refunded, the projected net
cash outlays in connection with construction of the two new
drillships, including payments to the shipbuilder, the costs of
owner-furnished equipment, financing and engineering, all other
costs, and U.K. lease benefits, would total approximately $730
million. This represents an 11 percent increase over GMI's
original cash outlay projection.
GMI does not expect the new agreements with Harland and Wolff to
materially impact its future earnings and believes that its
existing credit facilities are adequate to fund completion of the
drillships in accordance with the agreement. In addition, the new
agreement will not delay the drillships' expected delivery dates
beyond those previously reported, which are the first quarter of
<PAGE>
2000 for the GLOMAR C. R. LUIGS and as late as the third quarter of
2000 for the GLOMAR JACK RYAN.
Forward-Looking Statements
Under the Private Securities Litigation Reform Act of 1995,
companies are provided a "safe harbor" for discussing their
expectations regarding future performance. We believe it is in the
best interests of our stockholders and the investment community to
use these provisions and provide such forward-looking information.
We do so in this report and in other communications. Our forward-
looking statements include things such as our belief regarding the
merits of Harland and Wolff's claim for amounts in excess of the
contract price; our estimated net cash outlays in connection with
construction of the two new drillships; our expectations that the
new agreement with Harland and Wolff will not materially impact our
future earnings, that our existing credit facilities will be
adequate to fund completion of the drillships in accordance with
the new agreement, that the new agreement will not further delay
the drillships' expected delivery dates, and that the drillships
will be delivered in the first quarter of 2000 and as late as the
third quarter of 2000, respectively; and other statements that are
not historical facts.
Our forward-looking statements speak only as of the date of this
report and are based on available industry, financial and economic
data and our operating plans as of that date. They are also
inherently uncertain, and investors must recognize that events
could turn out to be materially different from what we expect.
Factors that could cause or contribute to such differences include,
but are not limited to incomplete knowledge or planning on our part
because information has not yet been provided to us or will take
more time to uncover or evaluate; the uncertainties inherent in
dealing with other parties, particularly where disputed matters are
involved, and in resolving such matters through negotiation,
arbitration, litigation, or other means; unanticipated additional
costs or delays in our drillship construction projects due to
things such as shipyard problems, price inflation, design and
engineering problems, regulatory requirements, and labor
difficulties; and other risk factors as may be discussed in our
latest annual report on Form 10-K and subsequent reports filed with
the U.S. Securities and Exchange Commission.
We disclaim any obligation or undertaking to disseminate any
updates or revisions to our statements, forward-looking or
otherwise, to reflect changes in our expectations or any change in
events, conditions or circumstances on which any such statements
are based.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
99.1 Amendment to Shipbuilding Contract, dated 19 November
1999, between Global Marine International Drilling
Corporation for and on behalf of Nelstar Leasing Company
<PAGE>
Limited, and Harland and Wolff Shipbuilding and Heavy
Industries Limited.
99.2 Amendment to Shipbuilding Contract, dated 19 November
1999, between Global Marine International Drilling
Corporation for and on behalf of BMBF (NO.12) Limited,
and Harland and Wolff Shipbuilding and Heavy Industries
Limited.
99.3 Agreement, dated 19 November 1999, between Fred. Olsen
Energy ASA, Global Marine International Drilling
Corporation for and on behalf of Nelstar Leasing Company
Limited, and Global Marine International Drilling
Corporation acting on its own behalf.
99.4 Agreement, dated 19 November 1999, between Fred. Olsen
Energy ASA, Global Marine International Drilling
Corporation for and on behalf of BMBF (NO.12) Limited,
and Global Marine International Drilling Corporation
acting on its own behalf.
99.5 Guarantee, dated 19 November 1999, by Global Marine Inc.
in favor of Harland and Wolff Shipbuilding and Heavy
Industries Limited, with respect to obligations of the
owner of the GLOMAR C. R. LUIGS.
99.6 Guarantee, dated 19 November 1999, by Global Marine Inc.
in favor of Harland and Wolff Shipbuilding and Heavy
Industries Limited, with respect to obligations of the
owner of the GLOMAR JACK RYAN.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GLOBAL MARINE INC.
Date: November 23, 1999 By: s/Thomas R. Johnson
Thomas R. Johnson
Vice President
and Corporate Controller
GLOBAL MARINE INC.
CURRENT REPORT ON FORM 8-K
DATED NOVEMBER 23, 1999
________________________________
INDEX TO EXHIBITS
EXHIBIT
99.1 Amendment to Shipbuilding Contract, dated 19 November 1999,
between Global Marine International Drilling Corporation
for and on behalf of Nelstar Leasing Company Limited, and
Harland and Wolff Shipbuilding and Heavy Industries
Limited.
99.2 Amendment to Shipbuilding Contract, dated 19 November 1999,
between Global Marine International Drilling Corporation
for and on behalf of BMBF (NO.12) Limited, and Harland and
Wolff Shipbuilding and Heavy Industries Limited.
99.3 Agreement, dated 19 November 1999, between Fred. Olsen
Energy ASA, Global Marine International Drilling
Corporation for and on behalf of Nelstar Leasing Company
Limited, and Global Marine International Drilling
Corporation acting on its own behalf.
99.4 Agreement, dated 19 November 1999, between Fred. Olsen
Energy ASA, Global Marine International Drilling
Corporation for and on behalf of BMBF (NO.12) Limited, and
Global Marine International Drilling Corporation acting on
its own behalf.
99.5 Guarantee, dated 19 November 1999, by Global Marine Inc. in
favor of Harland and Wolff Shipbuilding and Heavy
Industries Limited, with respect to obligations of the
owner of the GLOMAR C. R. LUIGS.
99.6 Guarantee, dated 19 November 1999, by Global Marine Inc. in
favor of Harland and Wolff Shipbuilding and Heavy
Industries Limited, with respect to obligations of the
owner of the GLOMAR JACK RYAN.
THIS CONTRACT AMENDMENT NUMBER THREE is made on 19 November
1999
BETWEEN:
(1) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION ("GMIDC")
for and on behalf of NELSTAR LEASING COMPANY LIMITED a
company incorporated under the laws of England and Wales
and having its registered office at 71 Lombard Street,
London EC3P 3BG (the "Owner"); and
(2) HARLAND AND WOLFF SHIPBUILDING AND HEAVY INDUSTRIES LIMITED a company
incorporated under the laws of Northern Ireland having its registered
office at Queens Island, Belfast, Northern Ireland, BT3 9DU (the
"Builder")
WHEREAS:
(A) By a shipbuilding contract dated 27 February 1998 (as subsequently
varied, amended and/or supplemented, the "Shipbuilding Contract") and
originally made between the Builder and GMIDC, the Builder agreed to
construct and deliver a deep water drillship designated hull number
1739.
(B) The parties to this Agreement now wish to make certain amendments to
the Shipbuilding Contract on the terms set out below.
(C) The Builder has made claims in excess of Pounds-Sterling 130 million
under the Shipbuilding Contract and the equivalent contract for Hull
No. 1740 in respect of (i) certain alleged breaches by the Owner and the
owner of Hull No. 1740, (ii) the costs associated with alleged changes to
the Specifications to the Shipbuilding Contract and the equivalent
contract for Hull No. 1740 and (iii) increases in steel weight of the
Vessel and Hull No. 1740, all of which claims are denied by the Owner,
the owner of Hull No. 1740 and GMIDC.
(D) The parties have agreed that, to the extent that these cannot be
settled amicably, the aforesaid claims shall be determined by
arbitration proceedings in London in accordance with the provisions of
the Shipbuilding Contract and the equivalent contract for Hull No.
1740.
(E) The Owner is prepared, entirely without prejudice to any issues of
liability, to make a payment on account of the portion of aforesaid
claims asserted against it and to procure the release of the Letter of
Credit against the provision by the Builder and Fred Olsen Energy ASA
of certain undertakings and guarantees with regard to the completion
of the Vessel as hereinafter set forth or referred to.
IT IS AGREED AS FOLLOWS:
1 DEFINITIONS
1.1 "Agreement" means this Contract Amendment Number Three.
1.2 Terms defined in the Shipbuilding Contract shall have the meaning given
therein when used in this Agreement unless otherwise defined or unless
the context otherwise requires.
1.3 "Claims" shall mean such part of the claims referred to in paragraph (C)
above as are pursued by the Builder in the arbitration proceedings
referred to in paragraph (D) above.
1.4 "Hull 1740 Agreement" means an agreement of even date between the owner
of Hull No. 1740 and the Builder on terms equivalent to this Agreement.
1.5 "FOE Agreement" means an agreement entered into or to be entered into
between Fred Olsen Energy ASA and the Owner in respect of the Shipbuilding
Contract.
1.6 "Further Amount Amendment" means the amendment to the Shipbuilding
Contract to be made by Clause 2.1(a).
1.7 Clause headings are for ease of reference only and shall not affect the
construction of this Agreement.
2 AMENDMENTS TO THE SHIPBUILDING CONTRACT
2.1 The parties agree that, subject to satisfaction of the conditions set out
in Clause 3 below, the Shipbuilding Contract shall be amended:
(a) by the insertion of a new paragraph at the end of Clause 8.3 as follows:
"The Owner shall in addition pay an aggregate amount of
Pounds-Sterling 29,000,000 on account of the Claims (as defined in
the Contract Amendment Number Three dated 19 November 1999) by
instalments, at the times and in the amounts set out in the
Seventeenth Schedule without deduction or withholding. All amounts
paid by the Owner pursuant to the previous sentence shall, as the
Builder acknowledges, be made on a without prejudice basis and
subject to the right of the Owner to recover all or any part of
such payment following an arbitration pursuant to this Contract.
"If a final arbitration award (not subject to appeal or, in case of
appeal, upon final determination of the appeal) made in favour of
the Builder values the Claims (and any further claims by the
Builder) in an amount less than the aggregate amount paid pursuant
to this paragraph, the Builder shall be liable to pay to the Owner
an amount equal to the difference plus interest at such rate as
the arbitrator may award in his discretion. However, if a final
arbitration award (not subject to appeal or, in case of appeal,
upon final determination of the appeal) made in favour of the
Builder values the Claims (and any further claims by the Builder)
in an amount more than the aggregate amount paid pursuant
to this paragraph, the Owner shall be liable to pay to the Builder
an amount equal to the difference plus interest at such rate as the
arbitrator may award in his discretion. The amount payable by one
party to the other shall be paid within three business days of a
final arbitration award being made in respect of the Claims (and
any further claims by the Builder) and the equivalent claims for
Hull No. 1740 and, if there is more than one arbitration in respect
of the Claims (and any further claims by the Builder) and the
equivalent claims for Hull No. 1740, within three business days
after the latest such final arbitration award. Notwithstanding
the previous provisions of this paragraph the amount payable by
one party to the other shall be a net amount determined by
reference to the liability in respect of the Vessel and Hull No.
1740 as if, for these purposes, the Owner and the owner of Hull
No. 1740 were the same person. If, as a result of the foregoing,
a net amount is payable by the Builder that amount shall be payable
in accordance with the joint written directions of the Owner and
the owner of Hull No. 1740.";
(b) by the insertion of a new clause 15.1.6 as follows:
"If at any time Fred Olsen Energy ASA ("FOE") defaults in the due
and punctual performance of any of its obligations under an
agreement dated 19 November 1999 entered into between FOE and the
Owner.",
and by replacing the full stop at the end of clause 15.1.5 with ";or";
(c) by deleting all references to the Letter of Credit; and
(d) by the addition of a Seventeenth Schedule in the form of the Schedule
hereto.
2.2 Any amounts paid by the Owner to the Builder pursuant to Clause 2.4 of
the FOE Agreement shall be paid and recoverable on the same basis as
amounts paid pursuant to the Further Amount Amendment and shall form part
of the final determination of what is owed to whom under the Further
Amount Amendment. The Owner undertakes with the Builder to make payments
subject to and in accordance with the provisions of Clause 2.4 of the FOE
Agreement, provided that the aggregate liability of the Owner to the
Builder and FOE in respect of breach of Clause 2.4 of the FOE Agreement
shall not exceed the amount determined in accordance with Clause 2.4(b) of
the FOE Agreement..
2.3 The Owner's obligation to make any payments pursuant to the Further Amount
Amendment or the FOE Agreement is conditional upon FOE not being in breach
of its obligations under the FOE Agreement.
2.4 The Owner agrees:
(a) that there shall be no further requests for adjustments or variations to
the Specifications or changes in the scope of works remaining to be
undertaken in respect of the Vessel;
(b) not to exercise its rights under Clause 15.2 of the Shipbuilding Contract
unless:
(i) FOE is in breach of its obligations under the FOE Agreement; and/or
(ii) Delivery of the Vessel has not taken place by 31st March 2000 as
such date shall be extended by all periods of Permissible Delay or
Owner's default under the Shipbuilding Contract arising after the
date of this Agreement, such circumstance being deemed to be a
Builder's default under Clause 15.1 (it being understood
that this provision shall not alter the Contract Delivery Date under
the Shipbuilding Contract); and
(c) that the delivery instalment for the Contract Price for the Vessel shall
be paid in full in accordance with the Contract and without deduction in
respect of liquidated damages for late delivery (but without prejudice to
the Owner's right to bring the Builder's liability for liquidated damages
into account in arbitration proceedings).
2.5 Subject to the performance by the Owner of its obligations under Clause
8.3 of the Shipbuilding Contract, the Builder waives any right to assert
a lien, right of arrest or other security against the Owner, its property
(including the Vessel) or any other party or its property in respect of
any potential arbitration award or court judgment in favour of the Builder
pursuant to the Shipbuilding Contract. Such waiver shall not,
however, extend to any claim by the Builder in respect of (i) the balance
of the Contract Price originally agreed under the Shipbuilding Contract
(ii) the amount of any agreed adjustments or variations to the
Specifications and (iii) any other amounts found due to the Builder in
arbitration proceedings pursuant to the Shipbuilding Contract.
This Clause shall operate without prejudice to the proviso to Clause 9.1
of the Shipbuilding Contract.
2.6 The Builder agrees that any further claims (in addition to the Claims)
which it may make before Delivery shall be made subject to and in
accordance with the applicable provisions of the Shipbuilding Contract and
shall not be publicised to any third party or among the Builder's
workforce.
2.7 For the avoidance of doubt, the Builder agrees that in the Put Option
Agreement dated 9 December 1998 between the Builder, the Owner and Global
Marine C.R. Luigs Limited (the "Put Option Agreement"), references to the
"New Contract" shall be construed as references to the Old Contract (as
defined in the Put Option Agreement) as amended and novated to the New
Owner (as defined in the Put Option Agreement) by the Novation Agreement
(as defined in the Put Option Agreement), as amended and modified by this
Agreement and as from time to time further amended and modified by all
other amendments to such New Contract which may have been made prior to
the date hereof or which may hereafter from time to time be made to the
New Contract in accordance with the terms thereof
3 CONDITIONS PRECEDENT
The effectiveness of the amendments to the Shipbuilding Contract set
out in clause 2.1 and the other matters set out in clause 2 is
conditional upon the Owner and the Builder respectively confirming that
it has received the documents and evidence set out below (which of the
Owner or Builder is to receive the applicable documents being
indicated in brackets) in form and substance satisfactory to the
applicable party on or before Friday, 19th November 1999;
(a) an Agreement (the "FOE Agreement") entered into by Fred Olsen Energy
ASA ("FOE") whereby FOE gives certain undertakings in favour of the
Owner (Owner);
(b) evidence of the due authorisation and execution by FOE of the FOE
Agreement including a Norwegian legal opinion (Owner);
(c) evidence (in the form of a secretarial certificate and a clean company
search) that the Builder is not subject to any receivership,
administrative receivership, administration, voluntary arrangement,
liquidation or other insolvency proceedings (Owner);
(d) a confirmation from Harland and Wolff Holdings plc of its guarantee of
the Shipbuilding Contract as amended by this Agreement (Owner);
(e) release of the Letter of Credit (Builder);
(f) a guarantee by Global Marine Inc. of the obligations of the Owner in
respect of the Claims as determined by a final arbitration award
pursuant to the Shipbuilding Contract or a final judgement of a court
of competent jurisdiction (Builder);
(g) evidence of the due authorisation and execution by Global Marine Inc of
the guarantee referred to in sub-clause (f) above (Builder);
(h) the execution by the applicable parties of the Hull 1740 Agreement and
the satisfaction of the conditions referred to in clause 3 thereof
(Builder and Owner);
(i) evidence that the conditions set out in clause 6 have been fulfilled
(Builder and Owner).
4 GENERAL
4.1 The provisions of Clauses 12.1 to 12.4 and 13 of the Novation Agreement in
respect of the Shipbuilding Contract shall apply to this Agreement with
any necessary changes.
4.2 This Agreement is without prejudice to the position of either party in
relation to actual or alleged defaults under the Shipbuilding Contract.
4.3 Save as amended or varied by this Agreement the Shipbuilding Contract shall
continue in full force and effect.
4.4 In the event of any conflict between the provisions of this Agreement and
those of the Shipbuilding Contract, the provisions of this Agreement shall
prevail.
4.5 This Agreement may be executed in several counterparts so that such
counterparts taken together and executed by both parties shall constitute
the same document.
5 LAW AND ARBITRATION
Clause 20 of the Shipbuilding Contract shall apply to this Agreement as if
set out in full with any necessary amendments.
6 SUBJECTS
The effectiveness of the Agreement is conditional upon on or before
Friday, 19th November 1999:
(a) the approval of the Board of Directors of GMIDC;
(b) the approval of the Board of Directors of Harland & Wolff Holdings plc; and
(c) the approval of the Owner.
It is acknowledged that this Agreement has been entered into by GMIDC and
the Builder in anticipation of the approvals referred to above but without
liability of GMIDC, the Owner or the Builder if those approvals (or any of
them) are not given on or before the date referred to above.
7 AMENDMENTS TO PUT OPTION AGREEMENT
The Builder agrees with the Owner that promptly following the receipt by
it of any joint request from the Owner and GMIDC, it will enter into an
agreement with the Owner and GMIDC making such amendments as the Owner and
GMIDC may jointly stipulate to the circumstances in which the Owner is
entitled to serve a "Put Notice" under Clause 3.2 of the Put Option
Agreement.
SIGNED by the representatives of the parties.
SIGNED by )
James Coiley ) /s/ James Coiley
for and on behalf of GLOBAL )
MARINE INTERNATIONAL )
DRILLING CORPORATION )
acting on behalf of )
NELSTAR LEASING COMPANY )
LIMITED )
SIGNED by )
B. Mugaas ) /s/ B. Mugaas
for and on behalf of HARLAND )
AND WOLFF SHIPBUILDING )
AND HEAVY INDUSTRIES )
LIMITED )
SCHEDULE
DATE AMOUNT (POUNDS-STERLING)
NOVEMBER 22, 1999 10,000,000
NOVEMBER 26, 1999 12,000,000
DECEMBER 17, 1999 7,000,000
THIS CONTRACT AMENDMENT NUMBER THREE is made on 19 November
1999
BETWEEN:
(1) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION ("GMIDC")
for and on behalf of BMBF (NO.12) LIMITED a company
incorporated under the laws of England and Wales and having
its registered office at Churchill Plaza, Churchill Way,
Basingstoke, RG21 7GL (the "Owner"); and
(2) HARLAND AND WOLFF SHIPBUILDING AND HEAVY INDUSTRIES LIMITED a company
incorporated under the laws of Northern Ireland having its registered
office at Queens Island, Belfast, Northern Ireland, BT3 9DU (the
"Builder")
WHEREAS:
(A) By a shipbuilding contract dated 28 March 1998 (as subsequently
varied, amended and/or supplemented, the "Shipbuilding Contract") and
originally made between the Builder and GMIDC, the Builder agreed to
construct and deliver a deep water drillship designated hull number
1740.
(B) The parties to this Agreement now wish to make certain amendments to
the Shipbuilding Contract on the terms set out below.
(C) The Builder has made claims in excess of Pounds-Sterling 130 million
under the Shipbuilding Contract and the equivalent contract for Hull
No. 1739 in respect of (i) certain alleged breaches by the Owner and the
owner of Hull No. 1739, (ii) the costs associated with alleged changes to
the Specifications to the Shipbuilding Contract and the equivalent
contract for Hull No. 1739 and (iii) increases in steel weight of the
Vessel and Hull No. 1739, all of which claims are denied by the Owner,
the owner of Hull No. 1739 and GMIDC.
(D) The parties have agreed that, to the extent that these cannot be
settled amicably, the aforesaid claims shall be determined by
arbitration proceedings in London in accordance with the provisions of
the Shipbuilding Contract and the equivalent contract for Hull No.
1739.
(E) The Owner is prepared, entirely without prejudice to any issues of
liability, to make a payment on account of the portion of aforesaid
claims asserted against it and to procure the release of the Letter of
Credit against the provision by the Builder and Fred Olsen Energy ASA
of certain undertakings and guarantees with regard to the completion
of the Vessel as hereinafter set forth or referred to.
IT IS AGREED AS FOLLOWS:
1 DEFINITIONS
1.1 "Agreement" means this Contract Amendment Number Three.
1.2 Terms defined in the Shipbuilding Contract shall have the meaning given
therein when used in this Agreement unless otherwise defined or unless
the context otherwise requires.
1.3 "Claims" shall mean such part of the claims referred to in paragraph (C)
above as are pursued by the Builder in the arbitration proceedings
referred to in paragraph (D) above.
1.4 "Hull 1739 Agreement" means an agreement of even date between the owner
of Hull No. 1739 and the Builder on terms equivalent to this Agreement.
1.5 "FOE Agreement" means an agreement entered into or to be entered into
between Fred Olsen Energy ASA and the Owner in respect of the Shipbuilding
Contract.
1.6 "Further Amount Amendment" means the amendment to the Shipbuilding
Contract to be made by Clause 2.1(a).
1.7 Clause headings are for ease of reference only and shall not affect the
construction of this Agreement.
2 AMENDMENTS TO THE SHIPBUILDING CONTRACT
2.1 The parties agree that, subject to satisfaction of the conditions set out
in Clause 3 below, the Shipbuilding Contract shall be amended:
(a) by the insertion of a new paragraph at the end of Clause 8.3 as follows:
"The Owner shall in addition pay an aggregate amount of Pounds-Sterling
28,000,000 on account of the Claims (as defined in the Contract Amendment
No. Three dated 19 November 1999) by instalments, at the times and in the
amounts set out in the Seventeenth Schedule without deduction or
withholding. All amounts paid by the Owner pursuant to the previous
sentence shall, as the Builder acknowledges, be made on a without
prejudice basis and subject to the right of the Owner to recover all or
any part of such payment following an arbitration pursuant to this
Contract.
"If a final arbitration award (not subject to appeal or, in case of
appeal, upon final determination of the appeal) made in favour of the
Builder values the Claims (and any further claims by the Builder) in an
amount less than the aggregate amount paid pursuant to this paragraph, the
Builder shall be liable to pay to the Owner an amount equal to the
difference plus interest at such rate as the arbitrator may award in his
discretion. However, if a final arbitration award (not subject to appeal
or, in case of appeal, upon final determination of the appeal) made in
favour of the Builder values the Claims (and any further claims by the
Builder) in an amount more than the aggregate amount paid pursuant
to this paragraph, the Owner shall be liable to pay to the Builder an
amount equal to the difference plus interest at such rate as the arbitrator
may award in his discretion. The amount payable by one party to the other
shall be paid within three business days of a final arbitration award
being made in respect of the Claims (and any further claims by the Builder)
and the equivalent claims for Hull No. 1739 and, if there is more than one
arbitration in respect of the Claims (and any further claims by the
Builder) and the equivalent claims for Hull No. 1739, within three
business days after the latest such final arbitration award.
Notwithstanding the previous provisions of this paragraph the
amount payable by one party to the other shall be a net amount determined
by reference to the liability in respect of the Vessel and Hull No. 1739
as if, for these purposes, the Owner and the owner of Hull No. 1739 were
the same person. If, as a result of the foregoing, a net amount is
payable by the Builder that amount shall be payable in accordance with the
joint written directions of the Owner and the owner of Hull No. 1739.";
(b) by the insertion of a new clause 15.1.7 as follows:
"If at any time Fred Olsen Energy ASA ("FOE") defaults in the due and
punctual performance of any of its obligations under an agreement
dated 19 November 1999 entered into between FOE and the Owner.",
and by replacing the full stop at the end of clause 15.1.6 with ";or";
(c) by deleting all references to the Letter of Credit; and
(d) by the addition of a Seventeenth Schedule in the form of the Schedule
hereto.
2.2 Any amounts paid by the Owner to the Builder pursuant to Clause 2.4 of the
FOE Agreement shall be paid and recoverable on the same basis as amounts
paid pursuant to the Further Amount Amendment and shall form part of the
final determination of what is owed to whom under the Further Amount
Amendment. The Owner undertakes with the Builder to make payments subject
to and in accordance with the provisions of Clause 2.4 of the FOE
Agreement, Provided that the aggregate liability of the Owner to the
Builder and FOE in respect of breach of Clause 2.4 of the FOE Agreement
shall not exceed the amount determined with Clause 2.4(b) of the FOE
Agreement.
2.3 The Owner's obligation to make any payments pursuant to the Further Amount
Amendment or the FOE Agreement is conditional upon FOE not being in breach
of its obligations under the FOE Agreement.
2.4 The Owner agrees:
(a) that there shall be no further requests for adjustments or variations to
the Specifications or changes in the scope of works remaining to be
undertaken in respect of the Vessel;
(b) not to exercise its rights under Clause 15.2 of the Shipbuilding Contract
unless:
(i) FOE is in breach of its obligations under the FOE Agreement; and/or
(ii) Delivery of the Vessel has not taken place by 31st July 2000 as such
date shall be extended by all periods of Permissible Delay or Owner's
default under the Shipbuilding Contract arising after the date of
this Agreement, such circumstance being deemed to be a Builder's
default under Clause 15.1 (it being understood that this provision
shall not alter the Contract Delivery Date under the Shipbuilding
Contract); and
(c) that the delivery instalment for the Contract Price for the Vessel shall
be paid in full in accordance with the Contract and without deduction in
respect of liquidated damages for late delivery (but without prejudice to
the Owner's right to bring the Builder's liability for liquidated damages
into account in arbitration proceedings).
2.5 Subject to the performance by the Owner of its obligations under Clause
8.3 of the Shipbuilding Contract, the Builder waives any right to assert a
lien, right of arrest or other security against the Owner, its property
(including the Vessel) or any other party or its property in respect of
any potential arbitration award or court judgment in favour of the Builder
pursuant to the Shipbuilding Contract. Such waiver shall not, however,
extend to any claim by the Builder in respect of (i) the balance of the
Contract Price originally agreed under the Shipbuilding Contract (ii) the
amount of any agreed adjustments or variations to the Specifications and
(iii) any other amounts found due to the Builder in arbitration proceedings
pursuant to the Shipbuilding Contract. This Clause shall operate
without prejudice to the proviso to Clause 9.1 of the Shipbuilding
Contract.
2.6 The Builder agrees that any further claims (in addition to the Claims)
which it may make before Delivery shall be made subject to and in
accordance with the applicable provisions of the Shipbuilding Contract and
shall not be publicised to any third party or among the Builder's
workforce.
2.7 For the avoidance of doubt, the Builder agrees that in the Put Option
Agreement dated 9 December 1998 between the Builder, the Owner and Global
Marine U.K. Limited (the "Put Option Agreement"), references to the "New
Contract" shall be construed as references to the Old Contract (as defined
in the Put Option Agreement) as amended and novated to the New Owner (as
defined in the Put Option Agreement), as amended and modified by this
agreement and as from time to time further amended and modified by all
other amendments to such New Contract which may have been made prior to
the date hereof or which may hereafter from time to time be made to the
New Contract in accordance with the terms thereof.
3 CONDITIONS PRECEDENT
The effectiveness of the amendments to the Shipbuilding Contract set
out in clause 2.1 and the other matters set out in clause 2 is
conditional upon the Owner and the Builder respectively confirming that
it has received the documents and evidence set out below (which of the
Owner or Builder is to receive the applicable documents being
indicated in brackets) in form and substance satisfactory to the
applicable party on or before Friday, 19th November 1999;
(a) an Agreement (the "FOE Agreement") entered into by Fred Olsen Energy
ASA ("FOE") whereby FOE gives certain undertakings in favour of the
Owner (Owner);
(b) evidence of the due authorisation and execution by FOE of the FOE
Agreement including a Norwegian legal opinion (Owner);
(c) evidence (in the form of a secretarial certificate and a clean company
search) that the Builder is not subject to any receivership,
administrative receivership, administration, voluntary arrangement,
liquidation or other insolvency proceedings (Owner);
(d) a confirmation from Harland and Wolff Holdings plc of its guarantee of
the Shipbuilding Contract as amended by this Agreement (Owner);
(e) release of the Letter of Credit (Builder);
(f) a guarantee by Global Marine Inc. of the obligations of the Owner in
respect of the Claims as determined by a final arbitration award
pursuant to the Shipbuilding Contract or a final judgement of a court
of competent jurisdiction (Builder);
(g) evidence of the due authorisation and execution by Global Marine Inc of
the guarantee referred to in sub-clause (f) above (Builder);
(h) the execution by the applicable parties of the Hull 1739 Agreement and
the satisfaction of the conditions referred to in clause 3 thereof
(Builder and Owner);
(i) evidence that the conditions set out in clause 6 have been fulfilled
(Builder and Owner).
4 GENERAL
4.1 The provisions of Clauses 12.1 to 12.4 and 13 of the Novation Agreement
shall apply to this Agreement with any necessary changes.
4.2 This Agreement is without prejudice to the position of either party in
relation to actual or alleged defaults under the Shipbuilding Contract.
4.3 Save as amended or varied by this Agreement the Shipbuilding Contract
shall continue in full force and effect.
4.4 In the event of any conflict between the provisions of this Agreement
and those of the Shipbuilding Contract, the provisions of this Agreement
shall prevail.
4.5 This Agreement may be executed in several counterparts so that such
counterparts taken together and executed by both parties shall constitute
the same document.
5 LAW AND ARBITRATION
Clause 20 of the Shipbuilding Contract shall apply to this Agreement as if
set out in full with any necessary amendments.
6 SUBJECTS
The effectiveness of the Agreement is conditional upon on or before
Friday, 19th November 1999:
(a) the approval of the Board of Directors of GMIDC;
(b) the approval of the Board of Directors of Harland & Wolff Holdings plc;
and
(c) the approval of the Owner.
It is acknowledged that this Agreement has been entered into by GMIDC and
the Builder in anticipation of the approvals referred to above but without
liability of GMIDC, the Owner or the Builder if those approvals (or any of
them) are not given on or before the date referred to above.
7 AMENDMENTS TO PUT OPTION AGREEMENT
The Builder agrees with the Owner that promptly following the receipt by
it of any joint request from the Owner and GMIDC, it will enter into an
agreement with the Owner and GMIDC making such amendments as the Owner and
GMIDC may jointly stipulate to the circumstances in which the Owner is
entitled to serve a "Put Notice" under Clause 3.2 of the Put Option
Agreement.
SIGNED by the representatives of the parties.
SIGNED by )
James Coiley ) /s/ James Coiley
for and on behalf of GLOBAL )
MARINE INTERNATIONAL )
DRILLING CORPORATION )
acting on behalf of )
BMBF (NO.12) LIMITED )
SIGNED by )
B. Mugaas ) /s/B. Mugaas
for and on behalf of HARLAND )
AND WOLFF SHIPBUILDING )
AND HEAVY INDUSTRIES )
LIMITED )
SCHEDULE
DATE AMOUNT (POUNDS-STERLING)
NOVEMBER 22, 1999 5,000,000
NOVEMBER 26, 1999 8,000,000
DECEMBER 17, 1999 5,000,000
JANUARY 13, 2000 10,000,000
THIS AGREEMENT is made this 19 day of November, 1999
BETWEEN:
(1) FRED OLSEN ENERGY ASA of Fred 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 Harland and Wolff 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 Fred Olsen Energy ASA
Fred Olsens gate 2
0152 Oslo
Norway
Fax No. 00 47 22 41 17 45
Attention: Ola T. Gjortz
the Owner Nelstar Leasing Company Limited
Great Surrey House
203 Blackfriars Road
England
Fax: +(44) 171 922 1874
Attention: Company Secretary
With copies to:Global Marine International Drilling Corporation
Parkstraat 83
2514 JG Den Haag
The Netherlands
Fax: (0031) 70 302 833
Attention: Mr Bruce Watson
and
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079
Fax: (1) 281 596 5196
Attention: General Counsel
and
Global Marine Drilling Company
777 N. Eldridge Parkway
Houston, Texas 77079
Fax: (1) 281 596 5179
Attention: John A. Thorson
(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 C.R. Luigs 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 )
Victor Friberg ) /s/Victor Friberg
)
for and on behalf of )
FRED OLSEN ENERGY ASA )
SIGNED by )
David Osborne ) /s/ David Osborne
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on )
behalf of Nelstar Leasing
Company )
Limited )
SIGNED by )
David Osborne ) /s/ David Osborne
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on its)
own behalf )
THIS AGREEMENT is made this 19 day of November, 1999
BETWEEN:
(1) FRED OLSEN ENERGY ASA of Fred Olsens gate 2, 0152 Oslo, Norway,
Oslo, Norway ("FOE")
(2) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION ("GMIDC") for
and on behalf of BMBF (NO.12) Limited (the "OWNER") and:
(3) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION acting on its
own behalf ("GMIDC")
BACKGROUND
(A) The Owner and Harland and Wolff Shipbuilding and Heavy
Industries Limited (the "BUILDER") are parties to a
shipbuilding contract originally entered into on 28 March
1998 between GMIDC and the Builder, as amended and as novated
from GMIDC 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. 1739 in
accordance with its terms (but the Owner acknowledges that
only the owner of Hull No. 1739 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. 1739 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. 1739'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 1739 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. 1739 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. 1739 in accordance with its
Shipbuilding contract shall exceed the Contract Price
for the Vessel and the Contract Price for Hull No.
1739 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. 1739 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. 1739 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. 1739, 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 Fred Olsen Energy ASA
Fred Olsens gate 2
0152 Oslo
Norway
Fax No. 00 47 22 41 17 45
Attention: Ola T. Gjortz
(b) the Owner BMBF (No.12) Limited
c/o Barclays Mercantile Business Finance Limited
Churchill Plaza
Churchill Way
Basingstoke
Hampshire RG21 7GL
England
Fax: +(44) 01256 810283
Attention: Company Secretary
Referring to: "Schedule number 52/5050 5371-3"
With copies to:Global Marine International Drilling Corporation
Parkstraat 83
2514 JG Den Haag
The Netherlands
Fax: (0031) 70 302 833
Attention: Mr Bruce Watson
and
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079
Fax: (1) 281 596 5196
Attention: General Counsel
and
Global Marine Drilling Company
777 N. Eldridge Parkway
Houston, Texas 77079
Fax: (1) 281 596 5179
Attention: John A. Thorson
(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 U.K. 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 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 )
Victor Friberg ) /s/ Victor Friberg
)
for and on behalf of )
FRED OLSEN ENERGY ASA )
SIGNED by )
David Osborne ) /s/ David Osborne
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on )
behalf of BMBF (NO.12) Limited)
SIGNED by )
David Osborne ) /s/ David Osborne
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on its)
own behalf )
THIS GUARANTEE (hereinafter called "Guarantee") is made this
19 day of November 1999 by GLOBAL MARINE INC. a corporation
incorporated under the laws of the State of Delaware
(hereinafter called the "Guarantor") in favour of
Harland and Wolff Shipbuilding and Heavy Industries Limited a
corporation incorporated under the laws of Northern Ireland
(hereinafter called the "Builder")
WHEREAS
(A) The Builder and Nelstar Leasing Company Limited (the "Owner")
are party to the Shipbuilding Contract in respect of Hull No.
1739 originally made between the Builder and Global Marine
International Drilling Corporation (formerly Global Marine
International Services Corporation) as novated to Global
Marine Leasing Corporation and as subsequently amended,
supplemented and novated in favour of the Owner (the
"Shipbuilding Contract").
(B) The Builder has made claims in excess of Pounds-Sterling 130,000,000
under the Shipbuilding Contract and the equivalent contract for Hull
No. 1740 in respect of:
(i) certain alleged breaches by the Owner and the owner of Hull No.
1740,
(ii) the cost associated with alleged changes to the
Specifications to the Shipbuilding Contract and the equivalent
contract for Hull No. 1740; and
(iii)increases in steel weight of the vessel and Hull No.
1740,
all of which claims are denied by the Owner and the owner of
Hull No. 1740.
(C) The Owner and the Builder has agreed that, to the extent that these
cannot be settled amicably, the aforesaid claims shall be determined
by arbitration proceedings in London in accordance with the provisions
of the Shipbuilding Contract and the equivalent contract for Hull No.
1740.
(D) The Owner and the Builder have entered into a Contract Amendment No.
Three to the Shipbuilding Contract of even date herewith (the
"Contract Amendment") pursuant to which the Owner has agreed, entirely
without prejudice to any issues of liability, to make a payment on
account of the portion of aforesaid claims inserted against it and
containing certain other agreements between the Owner and the Builder.
(E) It is a condition precedent to the effectiveness of the aforesaid
Contract Amendment No. Three that the Guarantor issues this Guarantee
in favour of the Builder.
1 In consideration of the Builder entering into the Contract Amendment
and other good and valuable consideration (the receipt and
sufficiency of which the Guarantor hereby acknowledges) the Guarantor
guarantees to the Builder the payment by the Owner of any and all
amounts from time to time or at any time payable by the Owner to the
Builder as determined by a final arbitration award or a final court
judgment (in either case, not subject to appeal or, in case of
appeal, upon final determination of the appeal) in favour of the
Builder in respect of the Shipbuilding Contract (including the
Contract Amendment and any other amendment thereto) and undertakes to
pay to the Builder any and all amounts which the Owner shall have
failed, now or in the future, to pay to the Builder as determined by
such final arbitration award or such final court judgment, subject to
Clause 2.1(a) of the Contract Amendment.
2 The Guarantor shall not be discharged or released from this Guarantee
by any arrangement made between the Owner and the Builder under the
Shipbuilding Contract or by any forbearance whether as to payment,
time, performance or otherwise even though such arrangement,
alteration or forbearance may be without the assent of the Guarantor,
or by the liquidation, bankruptcy or insolvency of the Owner.
3 This Guarantee shall be construed and governed in accordance with
English law and, for the exclusive benefit of the Builder, the
Guarantor hereby agrees to submit to the jurisdiction of the English
courts and hereby appoints WFW Legal Services Limited at its
registered office for the time being, presently at 15 Appold Street,
London EC2A 2HB as its agent for service of process in England in
respect of any legal proceedings arising out of or in connection with
this Guarantee.
IN WITNESS WHEREOF this Guarantee has been executed and delivered as a Deed
by duly authorised representatives of the Guarantor and the Builder in
duplicate effective as of the date and year first above written.
EXECUTED AS A DEED )
by )
)
W. Matt Ralls ) /s/W. Matt Ralls
)
for and on behalf of )
GLOBAL MARINE INC. )
such execution being witnessed )
by: Walter A. Baker )
)
)
SIGNED BY )
)
B. Mugaas ) /s/B. Mugaas
)
)
for and on behalf of )
HARLAND AND WOLFF )
SHIPBUILDING AND HEAVY )
INDUSTRIES LIMITED )
THIS GUARANTEE (hereinafter called "Guarantee") is made this
19 day of November 1999 by GLOBAL MARINE INC. a corporation
incorporated under the laws of the State of Delaware
(hereinafter called the "Guarantor") in favour of
Harland and Wolff Shipbuilding and Heavy Industries Limited a
corporation incorporated under the laws of Northern Ireland
(hereinafter called the "Builder")
WHEREAS
(A) The Builder and BMBF (NO.12) Limited (the "Owner") are party
to the Shipbuilding Contract in respect of Hull No. 1740
originally made between the Builder and Global Marine
International Drilling Corporation (formerly Global Marine
International Services Corporation) as subsequently amended,
supplemented and novated in favour of the Owner (the
"Shipbuilding Contract").
(B) The Builder has made claims in excess of Pounds-Sterling 130,000,000
under the Shipbuilding Contract and the equivalent contract for Hull
No. 1739 in respect of:
(i) certain alleged breaches by the Owner and the owner of Hull No.
1739,
(ii) the cost associated with alleged changes to the
Specifications to the Shipbuilding Contract and the equivalent
contract for Hull No. 1739; and
(iii)increases in steel weight of the vessel and Hull No.
1739,
all of which claims are denied by the Owner and the owner of
Hull No. 1739.
(C) The Owner and the Builder has agreed that, to the extent that these
cannot be settled amicably, the aforesaid claims shall be determined
by arbitration proceedings in London in accordance with the provisions
of the Shipbuilding Contract and the equivalent contract for Hull No.
1739.
(D) The Owner and the Builder have entered into a Contract Amendment No.
Three to the Shipbuilding Contract of even date herewith (the
"Contract Amendment") pursuant to which the Owner has agreed, entirely
without prejudice to any issues of liability, to make a payment on
account of the portion of aforesaid claims inserted against it and
containing certain other agreements between the Owner and the Builder.
(E) It is a condition precedent to the effectiveness of the aforesaid
Contract Amendment No. Three that the Guarantor issues this Guarantee
in favour of the Builder.
1 In consideration of the Builder entering into the Contract Amendment
and other good and valuable consideration (the receipt and
sufficiency of which the Guarantor hereby acknowledges) the Guarantor
guarantees to the Builder the payment by the Owner of any and all
amounts from time to time or at any time payable by the Owner to the
Builder as determined by a final arbitration award or a final court
judgment (in either case, not subject to appeal or, in case of
appeal, upon final determination of the appeal) in favour of the
Builder in respect of the Shipbuilding Contract (including the
Contract Amendment and any other amendment thereto) and undertakes to
pay to the Builder any and all amounts which the Owner shall have
failed, now or in the future, to pay to the Builder as determined by
such final arbitration award or such final court judgment, subject to
Clause 2.1(a) of the Contract Amendment.
2 The Guarantor shall not be discharged or released from this Guarantee
by any arrangement made between the Owner and the Builder under the
Shipbuilding Contract or by any forbearance whether as to payment,
time, performance or otherwise even though such arrangement,
alteration or forbearance may be without the assent of the Guarantor,
or by the liquidation, bankruptcy or insolvency of the Owner.
3 This Guarantee shall be construed and governed in accordance with
English law and, for the exclusive benefit of the Builder, the
Guarantor hereby agrees to submit to the jurisdiction of the English
courts and hereby appoints WFW Legal Services Limited at its
registered office for the time being, presently at 15 Appold Street,
London EC2A 2HB as its agent for service of process in England in
respect of any legal proceedings arising out of or in connection with
this Guarantee.
IN WITNESS WHEREOF this Guarantee has been executed and delivered as a Deed
by duly authorised representatives of the Guarantor and the Builder in
duplicate effective as of the date and year first above written.
EXECUTED AS A DEED )
by )
)
W. Matt Ralls ) /s/W. Matt Ralls
)
for and on behalf of )
GLOBAL MARINE INC. )
such execution being witnessed )
by: Walter A. Baker )
)
)
SIGNED BY )
)
B. Mugaas ) /s/B. Mugaas
)
)
for and on behalf of )
HARLAND AND WOLFF )
SHIPBUILDING AND HEAVY )
INDUSTRIES LIMITED )
