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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-5587
READING & BATES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-0642271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 Threadneedle, Suite 200, Houston, Texas 77079
(Address of principal executive offices)(Zip Code)
(713)496-5000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK
AT OCTOBER 13, 1995 : 61,245,725
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or Group of Companies for Which Report is Filed:
Reading & Bates Corporation and Subsidiaries
The financial statements for the three and nine month periods ended September
30, 1995 and 1994, include, in the opinion of the Company, all adjustments
(which consist only of normal recurring adjustments) necessary to present
fairly the financial position and results of operations for such periods.
The financial data for the three and nine month periods ended September 30,
1995 included herein have been subjected to a limited review by Arthur
Andersen LLP, the registrant's independent public accountants, whose report
is included herein. Results of operations for the three and nine month
periods ended September 30, 1995 are not necessarily indicative of results of
operations which will be realized for the year ending December 31, 1995. The
financial statements should be read in conjunction with the Company's Form
10-K for the year ended December 31, 1994.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 34,363 $ 42,319
Accounts receivable:
Trade, net 41,346 34,430
Other 2,554 2,952
Materials and supplies inventory 9,914 8,421
Other current assets 4,661 4,627
--------- ---------
Total current assets 92,838 92,749
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 825,737 775,189
Other 9,200 6,270
--------- ---------
Total property and equipment 834,937 781,459
Accumulated depreciation
and amortization (309,860) (291,140)
--------- ---------
Net property and equipment 525,077 490,319
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 2,657 3,733
--------- ---------
TOTAL ASSETS $ 620,572 $ 586,801
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations $ 13,272 $ 12,222
Long-term obligations due within one year 45,320 44,099
Accounts payable - trade 4,358 12,398
Accrued liabilities 15,680 17,322
--------- ---------
Total current liabilities 78,630 86,041
LONG-TERM OBLIGATIONS 96,728 81,937
OTHER NONCURRENT LIABILITIES 50,684 49,717
DEFERRED INCOME TAXES 2,977 3,075
--------- ---------
Total liabilities 229,019 220,770
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 44,496 43,871
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value 2,985 2,990
Common stock, $.05 par value 3,062 2,986
Capital in excess of par value 354,573 337,406
Accumulated deficit from March 31, 1991 (12,463) (19,984)
Other (1,100) (1,238)
--------- ---------
Total stockholders' equity 347,057 322,160
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 620,572 $ 586,801
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ --------------------
1995 1994 1995 1994
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 54,661 $ 42,773 $ 153,018 $ 124,623
-------- -------- --------- ---------
COSTS AND EXPENSES:
Operating expenses 30,503 30,703 93,648 90,301
Depreciation and amortization 7,786 7,302 22,599 21,343
General and administrative 3,686 4,271 12,121 13,241
-------- -------- --------- ---------
Total costs and expenses 41,975 42,276 128,368 124,885
-------- -------- --------- ---------
OPERATING INCOME (LOSS) 12,686 497 24,650 (262)
-------- -------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (3,944) (3,443) (11,697) (9,760)
Interest income 498 792 1,403 2,595
Other, net (272) (1,355) (954) (2,114)
-------- -------- --------- ---------
Total other income (expense) (3,718) (4,006) (11,248) (9,279)
-------- -------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE
AND MINORITY INTEREST 8,968 (3,509) 13,402 (9,541)
INCOME TAX EXPENSE (BENEFIT) (193) 709 1,539 2,791
-------- -------- --------- ---------
INCOME (LOSS) AFTER INCOME
TAX EXPENSE AND BEFORE
MINORITY INTEREST 9,161 (4,218) 11,863 (12,332)
MINORITY INTEREST (61) 213 (700) 798
-------- -------- --------- ---------
NET INCOME (LOSS) 9,100 (4,005) 11,163 (11,534)
DIVIDENDS ON PREFERRED STOCK 1,212 1,214 3,642 3,644
-------- -------- --------- ---------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ 7,888 $ (5,219) $ 7,521 $ (15,178)
======== ======== ========= =========
NET INCOME (LOSS) PER
COMMON SHARE $ .13 $ (.09) $ .13 $ (.27)
======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 11,163 $(11,534)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 22,599 21,343
Loss (gain) on dispositions of
property and equipment 323 (1,267)
Recognition of deferred expenses 6,640 2,745
Minority interest in income (loss)
of consolidated subsidiaries 700 (798)
Changes in assets and liabilities:
Accounts receivable, net (6,320) 1,142
Materials and supplies inventory (1,493) (254)
Deferred charges and other assets (5,689) (2,854)
Accounts payable - trade (8,040) 1,299
Accrued liabilities (2,790) 913
Accrued interest 4,246 4,122
Accrued lease expense - 3,344
Deferred revenue - 785
Deferred income taxes (98) 197
Other, net 1,015 2,569
-------- --------
Net cash provided by operating
activities 22,256 21,752
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 603 598
Purchases of property and equipment (33,450) (34,798)
Business acquisitions (400) (9,576)
Increase in investments in and advances
to unconsolidated investees (552) (218)
-------- --------
Net cash used in investing activities (33,799) (43,994)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term obligations 25,000 -
Net proceeds from short-term obligations 1,050 642
Principal payments on long-term obligations (20,970) (15,550)
Exercise of stock options 2,149 -
Dividends paid on preferred stock (3,642) (3,644)
-------- --------
Net cash provided by (used in)
financing activities 3,587 (18,552)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,956) (40,794)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 42,319 80,385
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 34,363 $ 39,591
======== ========
Supplemental Cash Flow Disclosures:
Interest paid $ 8,346 $ 5,808
Income taxes paid $ 2,339 $ 3,081
Noncash investing activities:
Purchase of property and equipment
in exchange for equity or debt $ 24,708 $ 24,324
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RECLASSIFICATION - Certain prior period amounts in the
consolidated financial statements have been reclassified for
comparative purposes. Such reclassifications had no effect on the net
income (loss) or the overall financial condition of the Company.
B) COMMITMENTS AND CONTINGENCIES
LITIGATION - On March 17, 1995, an action was filed by Louis
Silverman, individually and on behalf of all other shareholders of
Reading & Bates Corporation similarly situated, against the Company
and the individual members of its board of directors in the Court of
Chancery of the State of Delaware, New Castle County. On April 7,
1995 three additional actions were filed on behalf of Congregation
Beth Joseph, Harry Lewis and Mortimer Shulman against the Company and
its directors in the Court of Chancery of the State of Delaware. In
each of the four actions, the plaintiff alleges, inter alia, that the
directors breached their fiduciary duties by rejecting the previously
announced unsolicited merger proposal made by Sonat Offshore Drilling
Inc. and by adopting the previously announced shareholder rights plan.
Each of the named plaintiffs in the four actions purports to be an
owner of the Company's Common Stock and seeks to represent a class of
shareholders of the Company who are similarly situated. Each of the
plaintiffs seeks injunctive relief, damages in unspecified amounts and
certain other relief, including costs and expenses. The Company
believes each of the plaintiff's claims in these four actions are
groundless and that the defendants have meritorious defenses in each
action. The Company intends to defend each action vigorously.
C) LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
Debt obligations at December 31, 1994 $ 126,036
Proceeds from CIT Group (1) 25,000
Deferred payment obligation (2) 10,000
Less cash payments (20,970)
Other 1,982
---------
Debt obligations at September 30, 1995 142,048
Less long-term obligations due
within one year (45,320)
---------
Long-term obligations at
September 30, 1995 $ 96,728
=========
<FN>
(1) In May 1995, the Company entered into a $25 million loan
agreement with The CIT Group/Equipment Financing, Inc. (the "CIT
Group"). The terms of the loan agreement allow the Company to
receive advances (up to $25 million) from the CIT Group until
December 29, 1995 and at such date the entire $25 million is
required to be outstanding. As of September 30, 1995, the Company
had received the entire $25 million. The loan bears interest at the
one month LIBOR (5.875 % at September 30, 1995) plus 2.5%, and
interest is payable monthly. Loan principal is repayable commencing
in November 1996 in 35 equal monthly installments of $416,667 and
one payment of $10,416,655 in October 1999. The loan agreement
contains covenants which require the Company to meet certain
financial conditions, including, among others, a cash flow coverage
ratio and a long-term debt to total assets ratio, and is
collateralized by vessel mortgages on two of the drilling units
owned by the Company and related assignments of insurance and
earnings.
(2) In September 1995, the Company entered into a $10 million
deferred payment obligation in connection with the purchase of the
support vessel "IOLAIR". The deferred payment obligation bears
interest at a fixed rate of 8%, principal repayments are $2.5
million in September 1996, $7 million in September 1998 and $.5
million in September 2000, and the obligation is collateralized
by a vessel mortgage on the support vessel "IOLAIR".
</TABLE>
D) OTHER NONCURRENT LIABILITIES
The components of "OTHER NONCURRENT LIABILITIES" were as
follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Postretirement benefit obligations $ 16,078 $ 15,950
Net liabilities associated with
discontinued operations 6,976 7,003
Pension obligations 6,243 6,994
Reserve for foreign income taxes 5,831 6,759
Accrued interest expense related to the
8% Senior Subordinated Convertible
Debentures due December 1998 11,535 10,419
Other 4,021 2,592
-------- --------
Total $ 50,684 $ 49,717
======== ========
</TABLE>
E) CAPITAL SHARES
On March 15, 1995, the Company's board of directors declared a
dividend of one preferred share purchase right (a "Right") for each out-
standing share of the Company's Common Stock outstanding on March 31,
1995 (the"Record Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series B
Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Shares") of the Company at a price of $30.50, subject to
adjustment. The Rights will not become exercisable until 10 days after
a public announcement that a person or group has acquired 10% or more
of the Company's Common Stock (thereby becoming an "Acquiring Person")
or the commencement of a tender or exchange offer upon consummation of
which such person or group would own 10% or more of the Company's
Common Stock (the earlier of such dates being called the "Distribution
Date"). Rights will be issued for all shares of the Company's Common
Stock issued and outstanding on the Record Date. Until the
Distribution Date, the Rights will be evidenced by the certificates
representing the Company's Common Stock and will be transferrable only
with the Company's Common Stock. In the event that any person or
group becomes an Acquiring Person, each Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter entitle its holder to purchase shares of the
Company's Common Stock having a market value of two times the exercise
price of the Right. After any person or group has become an Acquiring
Person and prior to the acquisition by such person or group of 50% or
more of the outstanding shares of Common Stock, the Company's board of
directors may exchange each Right (other than Rights of the Acquiring
Person), in whole or in part, at an exchange ratio of one Common Share
or one one-hundredth of a Preferred Share per Right. If after a person
or group has become an Acquiring Person, the Company is acquired in a
merger or other business combination transaction or 50% or more of its
assets or earning power are sold, each Right will entitle its
holder to purchase, at the Right's then current exercise price, that
number of shares of common stock of the acquiring company which at the
time of such transaction will have a market value of two times the
exercise price of the Right. The board of directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per
Right at any time prior to such time as any person or group becomes an
Acquiring Person. The Rights expire on March 31, 2005. Preferred
Shares purchasable upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled to a preferential quarterly
dividend payment equal to the greater of $1 per share or 100 times the
dividend declared per Common Share. Liquidation preference will be
equal to the greater of $100 per share or 100 times the payment made
per Common Share. Each Preferred Share will have one vote, voting
together with the Common Stock.
In September 1995, the Company purchased the second-generation
semisubmersible drilling unit "RIG 42" (ex "FPS EDDIE DELAHOUSSAYE")
from FPS II, Inc. In connection with the purchase of "RIG 42" the
Company issued 1,232,057 shares of the Company's Common Stock, par
value $.05 per share and filed a shelf registration statement in
September 1995 registering such 1,232,057 shares. The Company has
been informed that all of such shares have been sold. Pursuant to the
terms of registration rights agreements among the Company and certain
other holders of the Company's common stock, as currently in effect,
the Company is required to maintain continuously effective shelf
registration statements with respect to approximately 11.5 million
shares of its common stock until the earlier to occur of (i) the sale
of such shares by the holders thereof or (ii) August 1, 1996 (in the
case of approximately 9.2 million shares) or September 14, 1996 (in the
case of approximately 2.3 million shares).
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Reading & Bates Corporation
We have reviewed the accompanying consolidated balance sheet of
Reading & Bates Corporation (a Delaware corporation) and Subsidiaries as
of September 30, 1995, and the related consolidated statements of
operations for the three and nine month periods ended September 30, 1995
and 1994 and the consolidated statement of cash flows for the nine month
periods ended September 30, 1995 and 1994. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based upon our review, we are not aware of any material
modifications that should be made to the financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Houston, Texas
October 16, 1995
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
On February 28, 1995, the Company announced that it had received an
unsolicited merger proposal from Sonat Offshore Drilling Inc. ("Sonat
Offshore") providing for the acquisition of 100% of the common stock of
the Company for a combination of Sonat Offshore common stock and $100
million in cash. As proposed by Sonat Offshore, the Company's
shareholders would have, at their election, received either (i) .357
shares of Sonat Offshore common stock or (ii) $7.50 of cash for each share
of the Company. To the extent that the election resulted in an under- or
oversubscription as to the $100 million of cash, a proration formula would
have been utilized. The Company engaged Morgan Stanley & Co. Incorporated
to act as its financial advisor with respect to evaluating the Sonat
Offshore proposal. On March 16, 1995, the Company announced that its
board of directors had rejected the Sonat Offshore proposal on the basis
that it was not in the best interests of the Company and its shareholders.
On April 18, 1995, Sonat Offshore announced that the merger discussions
had broken off following the rejection by the Company of Sonat Offshore's
proposal. The Company responded the same day announcing that discussions
with Sonat Offshore had not to that date demonstrated a willingness on the
part of Sonat Offshore to consider a transaction that would be reflective
of the short-term or long-term business prospects and value of the
Company. Subsequent to their announcing their intent to break off
discussions in April 1995, Sonat Offshore initiated additional discussions
in May 1995 with regard to potential merger transactions. However, these
subsequent discussions similarly did not result in terms that recognized
the Company's current or long-term value. The Company and Sonat Offshore
discontinued discussions in June 1995. The Company remains willing to
engage in discussions regarding possible business combinations that would
potentially strengthen its competitive position in the offshore drilling
industry, appropriately reflect the underlying value of the Company and
maximize shareholder value.
On March 15, 1995, the Company's board of directors declared a
dividend of one preferred share purchase right (a "Right") for each
outstanding share of the Company's Common Stock outstanding on March 31,
1995 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series B Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Shares") of the Company at a price of $30.50, subject to adjustment. The
Rights will not become exercisable until 10 days after a public
announcement that a person or group has acquired 10% or more of the
Company's Common Stock (thereby becoming an "Acquiring Person") or the
commencement of a tender or exchange offer upon consummation of which such
person or group would own 10% or more of the Company's Common Stock (the
earlier of such dates being called the "Distribution Date"). Rights will
be issued for all shares of the Company's Common Stock issued and
outstanding on the Record Date. Until the Distribution Date, the Rights
will be evidenced by the certificates representing the Company's Common
Stock and will be transferrable only with the Company's Common Stock. In
the event that any person or group becomes an Acquiring Person, each
Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter entitle its holder to purchase
shares of the Company's Common Stock having a market value of two times
the exercise price of the Right. After any person or group has become an
Acquiring Person and prior to the acquisition by such person or group of
50% or more of the outstanding shares of Common Stock, the Company's board
of directors may exchange each Right (other than Rights of the Acquiring
Person), in whole or in part, at an exchange ratio of one Common Share or
one one-hundredth of a Preferred Share per Right. If after a person or
group has become an Acquiring Person, the Company is acquired in a merger
or other business combination transaction or 50% or more of its assets or
earning power are sold, each Right will entitle its holder to purchase, at
the Right's then current exercise price, that number of shares of common
stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Right. The
board of directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right at any time prior to such time as
any person or group becomes an Acquiring Person. The Rights expire on
March 31, 2005. Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to a
preferential quarterly dividend payment equal to the greater of $1 per
share or 100 times the dividend declared per Common Share. Liquidation
preference will be equal to the greater of $100 per share or 100 times the
payment made per Common Share. Each Preferred Share will have one vote,
voting together with the Common Stock.
In September 1995, the Company purchased the support vessel "IOLAIR"
from BP Exploration Operating Company Limited ("BP Exploration"). The
"IOLAIR" is a dynamically positioned third-generation semisubmersible
support vessel built in 1982 for field support and living accommodations.
The "IOLAIR" is currently contracted with BP Exploration and will under-
go a comprehensive upgrade in 1996 after which it will be used under a
long-term gain share alliance with BP Exploration for its west of Shetland
development program, and will be available for use by other North Sea area
operators. Also in September 1995, the Company purchased the second-
generation semisubmersible drilling unit "RIG 42" (ex "FPS EDDIE
DELAHOUSSAYE") from FPS II, Inc. "RIG 42" is an excellent candidate for
the extended well test market, deepwater and/or harsh environment drilling
or eventual conversion to a floating production service. In connection with
the purchase of "RIG 42" the Company issued 1,232,057 shares of the
Company's Common Stock, par value $.05 per share and filed a shelf
registration statement in September 1995 registering such 1,232,057 shares.
The Company has been informed that all of such shares have been sold.
Pursuant to the terms of registration rights agreements among the Company
and certain other holders of the Company's common stock, as currently
in effect, the Company is required to maintain continuously effective
shelf registration statements with respect to approximately 11.5 million
shares of its common stock until the earlier to occur of (i) the sale of
such shares by the holders thereof or (ii) August 1, 1996 (in the case of
approximately 9.2 million shares) or September 14, 1996 (in the case
of approximately 2.3 million shares).
The Company's principal credit facility (the "ING Facility") with ING
Bank was amended and restated April 27, 1995 (as discussed below, the
Company has agreed to pay off the ING Facility by December 31, 1995). The
ING Facility currently consists of six facilities, "Facility A", "Facility
B", "Facility C", "Facility D", "Facility E", and "Facility F". Facility
A is in the form of a term loan with a restated principal amount
outstanding at December 31, 1994 of $15 million. Principal payments which
commenced on December 31, 1994 under the restated facility agreement
consist of four equal semiannual installments of $3.75 million with
interest payments at a varying rate equal to the 6 month London Interbank
Offered Rate ("LIBOR") (5.96875% at September 30, 1995) plus 1.5%.
Facility B, which was not restated in the amendment, is also in the form
of a term loan with an original balance of $45 million. Principal
payments which commenced on June 30, 1993 consist of nine equal semiannual
installments of approximately $4.4 million and a final installment of $5.2
million. Interest is payable quarterly at the 3 month LIBOR (5.96875% at
September 30, 1995) plus 1.9375%. Facilities C, D, E and F consist of
$50 million of working capital financing. Facility C is in the form of an
overdraft account with up to $15 million available through December 31,
1995. Interest on amounts outstanding under Facility C is paid quarterly
at the prime rate of Citibank, N.A. (8.75% as of September 30, 1995) plus
1.25%. Facility D is in the form of a $5 million letter of credit for a
term not to extend beyond April 30, 1996. Facility E is in the form of
standby letters of credit in an aggregate amount of $15 million with
expiration dates on or before June 30, 1997. Facilities D and E letters
of credit support bid, performance, and other bonds needed by the Company
in the ordinary course of business. Facility F is in the form of standby
letters of credit used to obtain customs bonds respecting duties assessed
on the Company's drilling equipment or rigs in Indonesia in a total amount
not to exceed $15 million. The terms of Facility F letters of credit
shall not extend beyond June 30, 1997. The amendment allows for the
transfer of the unused portion of commitment under Facility C to Facility
E or Facility F, or under Facility E to Facility C or Facility F. As of
September 30, 1995, the Company had drawn down $13.3 million available
from Facility C which is included in Short-term obligations.
Liquidity of the Company should be considered in light of the
significant fluctuations in demand experienced by drilling contractors as
rapid changes in oil and gas producers' expectations, budgets and drilling
plans occur. These fluctuations can rapidly impact the Company's
liquidity as supply and demand factors directly affect utilization and
dayrates, which are the primary determinants of cash flow from the
Company's operations. As of September 30, 1995, approximately $16 million
of total consolidated cash and cash equivalents of $34.4 million are
restricted from the Company's use outside of Arcade Drilling AS
("Drilling"). The Company's management currently expects that its cash
flow from operations, in combination with cash on hand and other sources
will be sufficient to satisfy the Company's 1995 and 1996 working capital
needs, dividends on preferred stock, capital expenditures on its existing
fleet, debt and other payment obligations. Other sources of cash might
include short-term loans, debt rescheduling, new debt, new equity, asset
disposals and/or by delaying a portion of planned capital or other
expenditures. As disclosed at the end of the first quarter of 1995, in
view of the Company's debt repayment schedule for the balance of 1995
currently amounting in the aggregate to $50.1 million (including amounts
to be repaid to ING Bank as described below), the Company expected certain
debt rescheduling and/or other financing would likely be required by
yearend. In May 1995, the Company entered into a $25 million loan
agreement with The CIT Group /Equipment Financing, Inc. (the "CIT Group").
The terms of the loan agreement allow the Company to receive advances up
to $25 million from the CIT Group until December 29, 1995 at which date
the entire $25 million is required to be outstanding. See Note C of Notes
to Consolidated Financial Statements for a further discussion of the CIT
Group loan terms. The Company has agreed to pay off the ING Facility by
December 31, 1995. The principal balance outstanding to ING Bank at
December 31, 1995 is expected to be approximately $26 million of which
$17.8 million is currently classified as long-term. The Company is
confident in its ability to secure replacement financing prior to the pay
off and has therefore not included the $17.8 million at September 30, 1995
in the CURRENT LIABILITIES section of the Company's Consolidated Balance
Sheet. Management is constantly evaluating financing alternatives
available to the Company and believes that sufficient flexibility exists
to meet any liquidity shortfalls.
The Company intends to continue to modernize and expand its fleet, in
order to meet the requirements of competitive conditions and the changing
needs of its customers. In this regard, the Company has from time to time
in the past engaged in, and currently remains willing to engage in,
preliminary discussions with other industry participants with respect to
business combinations that would potentially strengthen its competitive
position in the offshore drilling industry. Moreover, the Company
continues to consider the selective acquisition of existing rigs, directly
or through business combination transactions. In addition, the Company's
wholly owned subsidiary, Reading & Bates Development Co. ("Development")
was the General Contractor for the provision of a semisubmersible floating
production system for the Liuhua 11-1 Project which was being jointly
developed by Amoco Orient Petroleum Company ("Amoco") and China Offshore
Oil Nanhai East Corporation in the South China Sea. The Liuhua 11-1
Project has been completed and the floating production system was
delivered to Amoco in June 1995. In April 1995, Development entered into
a letter of intent with Enserch Exploration, Inc. ("Enserch") to acquire a
20% working interest in Enserch's Green Canyon 254 Project in the U.S.
Gulf of Mexico. Subject to the rights of the working interest owners
under the joint operating agreement, the Company's third-generation
semisubmersible "M. G. HULME, JR." would also receive a three year
drilling contract, plus options, for the field's development drilling upon
completion of an upgrade of the unit for operations in up to 3,300 feet of
water, and the Company would convert its second-generation semisubmersible
"RIG 41", or an equivalent unit, to a floating production vessel capable
of processing up to 70,000 barrels of oil per day. The project, if
successful, would have a substantial impact on the Company's future
earnings and cash flow. In May 1995, Mobil Exploration & Producing U.S.
Inc., an affiliate of Mobil Corporation, signed a letter of intent to
purchase a 40% working interest in the project. Enserch is expected to
retain the remaining 40% working interest in the project. Through
September 30, 1995, the Company has invested approximately $2.7 million in
the project. The Company continues to consider selective expansion in
floating production through additional management contracts, alliances
with other companies, the acquisition of floating production equipment
and/or participation in field development projects.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 1994
The Company's net income for the nine months ended September 30, 1995
was $11.2 million ($.13 income per share after preferred stock dividends
of $3.6 million) compared to a net loss of $11.5 million ($.27 loss per
share after preferred stock dividends of $3.6 million) for the same period
of 1994. Income from operations for the nine months ended September 30,
1995 was $24.6 million compared to a loss from operations of $.3 million
in 1994. The Company's rig utilization for the nine months ended
September 30, 1995 and 1994 was 85% and 73%, respectively.
Operating revenues are primarily a function of dayrates and
utilization. The $28.4 million increase in operating revenues for the
nine months ended September 30, 1995 over the same period in 1994 is
mainly attributable to increased utilization of the fourth-generation
semisubmersible and jackup fleets. In regards to the fourth-generation
fleet in particular, utilization increased from 72% for the first nine
months of 1994 to 98% for the first nine months of 1995. The "ARCADE
FRONTIER" experienced 100% utilization for the nine months ended September
30, 1995 versus utilization of just 65% for the same period in 1994. The
"JACK BATES" operated 117 more days in the nine month period ended
September 30, 1995 than for the nine month period ended September 30, 1994
at improved average dayrates. Mitigating the improvements in operating
revenues reported for the "JACK BATES" in the first nine months of 1995 as
compared to the first nine months of 1994 is the reporting of $2.4 million
of operating revenues due to the 1994 settlement of the loss of hire claim
relating to the "JACK BATES" casualty caused by Hurricane Andrew. In
regards to the jackup fleet in particular, utilization for the jackup
fleet increased 18% from utilization of 67% for the first nine months of
1994 to 85% for the first nine months of 1995. Seven of the Company's ten
jackups experienced improved utilization for the nine months ended
September 30, 1995 as compared to the same period in 1994. As an offset
to this improved utilization, included in operating revenues for the first
nine months of 1994 is $1.8 million generated from the operations of the
"SONNY VOSS" which in December 1994 was removed from the Company's fleet
as a result of the Company negotiating an early release from its remaining
lease obligation. Further offsetting the improvement in the jackup fleet
was the performance of the Company's one mat-supported jackup, the "D. K.
McINTOSH". While this rig was 100% utilized during the first nine months
of 1994, the rig operated only five days during the first nine months of
1995. Countering the overall improvements in utilization and dayrates of
the fourth-generation semisubmersible and jackup fleets, the utilization
for the tender fleet dropped considerably for the nine months ended
September 30, 1995 as compared to the nine months ended September 30,
1994. In particular, the "CHARLEY GRAVES" completed a three and one-half
year contract in Malaysia in mid April 1995 and did not receive a dayrate
for the remainder of the second quarter and the third quarter of 1995.
Operating expenses do not necessarily fluctuate in proportion to
changes in operating revenues due to the continuation of personnel on
board and equipment maintenance when the Company's drilling units are
stacked. It is only during prolonged stacked periods that the Company is
significantly able to reduce labor costs and equipment maintenance
expense. Additionally, labor costs fluctuate due to the geographic
diversification of the Company's drilling units and the mix of labor
between expatriates and nationals as stipulated in the drilling contracts.
In general, labor costs increase primarily due to higher salary levels
and inflation. Equipment maintenance expenses fluctuate depending upon
the type of activity the drilling unit is performing and the age and
condition of the equipment. Scheduled maintenance of equipment and
overhauls are performed in accordance with the Company's preventive
maintenance program.
Operating expenses increased $3.3 million for the nine months ended
September 30, 1995 as compared to the same period in 1994. This increase
is comprised of several large offsetting factors. Contributing to the
increase in operating expenses is increased utilization for the "JACK
BATES" between the comparison periods. The "JACK BATES" operated 95%
during the first nine months of 1995 as compared to 52% during the first
nine months of 1994, part of which time the rig was under tow to offshore
Indonesia. Extended mobilization periods and contract preparation periods
generally result in lower operating expenses since net mobilization and
contract preparation expenses are normally deferred and amortized over the
following contract. Also contributing to the increase in operating
expenses, the "ARCADE FRONTIER" experienced significantly higher operating
costs thus far in 1995 as compared to 1994 as the rig was stacked for an
extended period during 1994 and had reduced operating expenses during that
period. In addition, two of the Company's jackups moved into geographic
areas with higher operating costs. Countering these operating expense
increases were three major items which reduced operating expenses in the
first nine months of 1995 as compared to the first nine months of 1994.
First, included in operating expenses for the period in 1994 is $4.4
million of operating expenses (net of a $1.3 million credit due to the
recognition of the deferred gain on the sale/leaseback) generated from the
operation of the "SONNY VOSS" which in December 1994 was removed from the
Company's fleet as a result of the Company negotiating an early release
from its remaining lease obligation. Second, also included in operating
expenses for the nine months ended September 30, 1994 is $4.3 million of
lease expense relating to two of the Company's jackups. In September
1994, the Company eliminated such lease costs by purchasing certain notes
and interests relating to the lease debt outstanding associated with the
operating leases of the two jackups. Third, the "D. K. McINTOSH" incurred
significantly lower operating costs for the first nine months of 1995 as
compared to the 1994 period since the rig has experienced a prolonged
stacked period thus far in 1995 (operating only five days through
September 30, 1995) as compared to 100% utilization for the same period in
1994.
Income tax expense decreased for the nine months ended September 30,
1995 compared to the same period in 1994 despite increases in revenues and
income before income taxes. Such decrease is primarily due to a change in
the Company's foreign geographic areas of operations coupled with the
resolution, in the third quarter of 1995, of a foreign tax assessment at
less than expected costs.
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED
TO THREE MONTHS ENDED SEPTEMBER 30, 1994
The Company's net income for the three months ended September 30, 1995
was $9.1 million ($.13 income per share after preferred stock dividends of
$1.2 million) compared with a net loss of $4.0 million ($.09 loss per
share after preferred stock dividends of $1.2 million) for the same period
of 1994. Income from operations for the three months ended September 30,
1995 was $12.7 million compared to income from operations of $.5 million
in 1994. The Company's rig utilization for the three months ended
September 30, 1995 and 1994 was 86% and 74%, respectively.
As previously mentioned, operating revenues are primarily a function
of dayrates and utilization. The $11.9 million increase in operating
revenues for the three months ended September 30, 1995 over the same
period in 1994 is mainly attributable to increased utilization and
dayrates of the third- and fourth-generation semisubmersible and jackup
fleets. In regards to the third-generation semisubmersible fleet in
particular, the "JIM CUNNINGHAM" operated 24 additional days in the third
quarter of 1995 as compared to the third quarter of 1994. Also, the "M.
G. HULME, JR.", although 100% utilized during both comparison quarters,
benefited from an increase of over $22,800 per day in average dayrates.
In regards to the fourth-generation fleet in particular, utilization
increased from 96% for the third quarter of 1994 to 100% for the third
quarter of 1995. More importantly, average dayrates for the fourth-
generation fleet increased more than $7,500 per day between the two
comparison quarters. In regards to the jackup fleet in particular, four
specific rigs, the "F. G. McCLINTOCK", the "D. R. STEWART", the "HARVEY H.
WARD", and the "C. E. THORNTON" all experienced significant improvements
in their utilization rates for the third quarter of 1995 as compared to
the third quarter of 1994. The average utilization for those four rigs
during the three months ended September 30, 1995 was 100% as compared to
an average utilization for the same four rigs of approximately 26% during
the three months ended September 30, 1994. Additionally, the "F. G.
McCLINTOCK" enjoyed an average dayrate increase of slightly less than
$15,000 per day between the two comparison quarters. This 74% improvement
in average utilization for those four rigs plus the increased average
dayrate for the "F. G. McCLINTOCK" translates to an approximately $9.4
million improvement in operating revenues between the two comparison
quarters for the Company. This improvement in the jackup fleet was
partially offset by the performance of the Company's one mat-supported
jackup, the "D. K. McINTOSH" . While this rig was 100% utilized during
the entire third quarter of 1994, the rig was stacked the entire third
quarter of 1995 contributing an approximately $1.4 million unfavorable
operating revenues variance between the two periods. Countering the
improvements in utilization and dayrates experienced in the
semisubmersible and jackup fleets, the "CHARLEY GRAVES", one of the
Company's two tenders, completed a three and one-half year contract in
Malaysia in mid April 1995 then remained stacked through the third quarter
of 1995. This resulted in a decrease of approximately $2.7 million in
operating revenues between the two comparison periods.
Operating expenses decreased $.2 million for the three months ended
September 30, 1995 as compared to the same period in 1994. The $.2
million is inclusive of a few relatively large offsetting variances. The
"HARVEY H. WARD" incurred $2.9 million of additional operating expenses in
the third quarter of 1995 as compared to the third quarter of 1994.
During the 1994 period, the rig was stacked in Singapore undergoing major
contract preparation work in anticipation of its upcoming mobilization to
Australia. As was the case with the "HARVEY H. WARD", extended
mobilization periods and contract preparation periods generally result in
lower operating expenses since net mobilization and contract preparation
expenses are normally deferred and amortized over the following contract.
Thus the rig's current Australia contract is absorbing the contract
preparation and net mobilization expense. Countering this operating
expense increase were four items which reduced operating expenses in the
third quarter of 1995 as compared to the third quarter of 1994. First,
included in operating expenses for the three months ended September 30,
1994 is $1.3 million of operating expenses generated from the operation of
the "SONNY VOSS" which in December 1994 was removed from the Company's
fleet as a result of the Company negotiating an early release from its
remaining lease obligation. Second, included in operating expenses for
the three months ended September 30, 1994 was $1.1 million of lease
expense related to two of the Company's jackups. In September 1994, the
Company eliminated such lease costs by purchasing certain notes and
interests relating to the lease debt outstanding associated with the
operating leases of the two jackups. Third, the "D. K. McINTOSH" incurred
significantly lower operating costs for the third quarter of 1995 as
compared to the third quarter of 1994 since the rig has experienced a
prolonged stacked period thus far in 1995 as compared to 100% utilization
for the third quarter of 1994. Finally, the "CHARLEY GRAVES" showed
reduced operating expenses for the three months ended September 30, 1995
as compared to the three months ended September 30, 1994 since a portion
of the operating expenses for the 1995 quarter were deferred as the rig
was undergoing contract preparation and mobilizing to Egypt for a new
contract.
Income tax expense decreased for the three months ended September 30,
1995 compared to the same period in 1994 despite increases in revenues and
income before income taxes. Such decrease is primarily due to a change in
the Company's foreign geographic areas of operations coupled with the
resolution, in the third quarter of 1995, of a foreign tax assessment at
less than expected costs.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
LITIGATION - The Company is one of the defendants in certain
litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma
in the U.S. District Court for the Western District of Oklahoma, seeking
to set aside two communitization agreements with respect to three leases
involving tribal lands in which the Company previously owned interests and
to have those leases declared expired. In June 1989, the U.S. District
Court entered an interim order in favor of the plaintiffs. On appeal, the
U.S. Court of Appeals for the Tenth Circuit upheld the decision of the
trial court and petitions for rehearing of that decision were denied.
Petitions for writs of certiorari filed by the parties with the U.S.
Supreme Court have been denied, and the case has been remanded to the
trial court for determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for
the Southern District of West Virginia against Reading & Bates Coal Co., a
wholly owned subsidiary of the Company, by SCW Associates, Inc. claiming
breach of an alleged agreement to purchase the stock of Belva Coal
Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal
properties in West Virginia. When those coal properties were sold in July
1989 as part of the disposition of the Company's coal operations, the
purchasing joint venture indemnified Reading & Bates Coal Co. and the
Company against any liability Reading & Bates Coal Co. might incur as the
result of this litigation. A judgment for the plaintiff of $32,000
entered in February 1991 was satisfied and Reading & Bates Coal Co. was
indemnified by the purchasing joint venture. On October 31, 1990, SCW
Associates, Inc., the plaintiff in the above-referenced action, filed a
separate ancillary action in the Circuit Court, Kanawha County, West
Virginia against the Company and a wholly owned subsidiary of Reading &
Bates Coal Co., Caymen Coal, Inc. (former owner of the Company's West
Virginia coal properties), as well as the joint venture, Mr. William B.
Sturgill personally (former President of Reading & Bates Coal Co.), three
other companies in which the Company believes Mr. Sturgill holds an equity
interest, two employees of the joint venture, First National Bank of
Chicago and First Capital Corporation. The lawsuit seeks to recover
compensatory damages of $50 million and punitive damages of $50 million
for alleged tortious interference with the contractual rights of the
plaintiff and to impose a constructive trust on the proceeds of the use
and/or sale of the assets of Caymen Coal, Inc. as they existed on
October 15, 1988. Subsequently, the court entered an order dismissing the
Company's indirect subsidiary. The Company intends to defend its
interests vigorously and believes the damages alleged by the plaintiff in
this action are highly exaggerated. In any event, the Company believes
that it has valid defenses and that it will prevail in this litigation.
On March 17, 1995, an action was filed by Louis Silverman,
individually and on behalf of all other shareholders of Reading & Bates
Corporation similarly situated, against the Company and the individual
members of its board of directors in the Court of Chancery of the State of
Delaware, New Castle County. On April 7, 1995 three additional actions
were filed on behalf of Congregation Beth Joseph, Harry Lewis and Mortimer
Shulman against the Company and its directors in the Court of Chancery of
the State of Delaware. In each of the four actions, the plaintiff
alleges, inter alia, that the directors breached their fiduciary duties by
rejecting the previously announced unsolicited merger proposal made by
Sonat Offshore Drilling Inc. and by adopting the previously announced
shareholder rights plan. Each of the named plaintiffs in the four actions
purports to be an owner of the Company's Common Stock and seeks to
represent a class of shareholders of the Company who are similarly
situated. Each of the plaintiffs seeks injunctive relief, damages in
unspecified amounts and certain other relief, including costs and
expenses. The Company believes each of the plaintiff's claims in these
four actions are groundless and that the defendants have meritorious
defenses in each action. The Company intends to defend each action
vigorously.
The Company is involved in these and various other legal actions
arising in the normal course of business. After taking into consideration
the evaluation of such actions by counsel for the Company, management is
of the opinion that the outcome of known claims and litigation will not
have a material adverse effect on the Company's business or consolidated
financial position or results of operations.
Item 6(a). Exhibits
Exhibit 10.1 - Amendment No. 1, dated July 31, 1995, to the Amended
and Restated Credit Facility Agreement dated as of
April 27, 1995 among the Registrant, Reading & Bates
Drilling Co., Reading & Bates Exploration Co.,
Reading and Bates, Inc., Reading and Bates Borneo
Drilling Co., Ltd. and Reading & Bates (A) Pty.
Ltd., subsidiaries of the Registrant, and
Internationale Nederlanden Bank N.V.
Exhibit 10.2 - Memorandum of Agreement dated August 31, 1995
between FPS II, Inc., as holder of legal title for
the benefit of DeepFlex Production Partners, L.P.
and Reading & Bates (U.K.) Limited, a subsidiary of
the Registrant.
Exhibit 10.3 - Agreement for the sale and purchase of Semi-
Submersible Emergency Support Vessel Iolair dated
September 8, 1995 between BP Exploration Operating
Company Limited and Reading & Bates (Caledonia)
Limited, a subsidiary of the Registrant.
Exhibit 10.4 - Mortgage of a Ship dated September 8, 1995 between
Reading & Bates (Caledonia) Limited, a subsidiary of
the Registrant, and BP Exploration Operating Company
Limited.
Exhibit 10.5 - Mortgage of a Ship dated September 8, 1995 between
Reading & Bates (Caledonia) Limited, a subsidiary of
the Registrant, and Britoil plc.
Exhibit 10.6 - Deed of Covenant dated September 8, 1995 between
Reading & Bates (Caledonia) Limited, a subsidiary of
the Registrant, and BP Exploration Operating Company
Limited.
Exhibit 10.7 - Deed of Covenant dated September 8, 1995 between
Reading & Bates (Caledonia) Limited, a subsidiary of
the Registrant, and Britoil Public Limited Company.
Exhibit 10.8 - Performance Guarantee dated September 8, 1995 by the
Registrant in favour of BP Exploration Operating
Company Limited.
Exhibit 10.9 - Performance Guarantee dated September 8, 1995 by the
Registrant in favour of Britoil plc.
Exhibit 10.10 - Initial Services Agreement dated September 8, 1995
between Britoil Public Limited Company and Reading &
Bates (Caledonia) Limited, a subsidiary of the
Registrant.
Exhibit 10.11 - Heads of Agreement for the provision of Vessel
Services dated September 8, 1995 between Britoil
Public Limited Company, Reading & Bates (Caledonia)
Limited, a subsidiary of the Registrant, and the
Registrant.
Exhibit 11 - Computation of Earnings Per Common Share, Primary
and Fully Diluted.
Exhibit 15 - Letter regarding unaudited interim financial
information.
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being
submitted as an exhibit only in the electronic
format of this Quarterly Report on Form 10-Q being
submitted to the Securities and Exchange
Commission.)
Item 6(b). Reports on Form 8-K
There were eight Current Reports on form 8-K filed during the three
months ended September 30, 1995. A Current Report on Form 8-K was
filed July 14, 1995 disclosing that the "JACK BATES" was awarded a
contract with Mobil North Sea Limited; filed July 19, 1995 disclosing
the Company's second quarter 1995 earnings; filed August 3, 1995
disclosing the completion of the Company's portion of the Amoco Orient
Petroleum Company's Liuhua field development project; filed August 21,
1995 disclosing the Company's intent to purchase the support vessel
"IOLAIR" from BP Exploration Operating Company Limited; filed August
23, 1995 disclosing that the "M.G. HULME, JR." was awarded a three year
contract with Enserch Exploration, Inc.; filed September 12, 1995
disclosing the Company's purchase of the semisubmersible "TREASURE
DRILLER" from FPS II, Inc.; filed September 15, 1995 disclosing the
Company's purchase the support vessel "IOLAIR" from BP Exploration
Operating Company Limited; and filed September 19, 1995 disclosing the
promotion of T. W. Nagle to Executive Vice President, Finance and
Administration.
<PAGE>
SIGNATURE
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.
READING & BATES CORPORATION
Date: October 23, 1995 By /s/T. W. Nagle
----------------------
T. W. Nagle
Executive Vice President,
Finance and Administration
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT FACILITY
AGREEMENT, dated as of July 31, 1995 (this "Amendment"), is entered into
by and among READING & BATES CORPORATION, a Delaware corporation ("RBC"),
READING & BATES DRILLING CO., an Oklahoma corporation ("RBD"), READING &
BATES EXPLORATION CO., an Oklahoma corporation ("RBX"), READING AND BATES,
INC., an Oklahoma corporation ("RBI"), READING AND BATES BORNEO DRILLING
CO., LTD., an Oklahoma corporation ("RBB"), READING & BATES (A) PTY. LTD.,
a company incorporated under the laws of the state of Western Australia,
Commonwealth of Australia ("RBA") (RBC, RBD, RBX, RBI, RBB and RBA being
referred to collectively as the "Borrowers" and individually as a
"Borrower"), and INTERNATIONALE NEDERLANDEN BANK, N.V., a company
incorporated under the laws of the Netherlands, formerly known as NMB
POSTBANK GROEP N.V. (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrowers and the Lender are parties to a certain
Amended and Restated Credit Facility Agreement dated as of April 27, 1995
(as the same may hereafter be amended, the "Credit Agreement"; all terms
used herein without definition shall have the meanings ascribed to such
terms in the Credit Agreement);
WHEREAS, Reading & Bates Offshore, Limited, an affiliate of the
Borrowers, desires to enter into a revolving/term loan facility in the
approximate amount of USD 25,000,000 with The CIT Group/Equipment
Financing, Inc., to be secured by first preferred ship mortgages on the
jack-up drilling rigs "F.G. McClintock" and "George H. Galloway" (the "CIT
Loan");
WHEREAS, the CIT Loan is to be guaranteed by RBC; and
WHEREAS, the Borrowers and the Lender have agreed to amend the Credit
Agreement to provide for the Lender's consent to the CIT Loan and to
revise the maturity dates and expiration dates of the Facilities and
otherwise modify the Credit Agreement, all upon the terms and subject to
the conditions and requirements acceptable to the Lender as set forth
herein;
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Definitions. Section 1.1 of the Credit Agreement is hereby amended
by:
(a) deleting the existing definitions of "Current Liabilities",
"Facility A Maturity Date", "Installment Payment Dates", "Interest Pay-
ment Date", "Interest Period" and "Security Deposits" and substituting
in lieu thereof the following:
"Current Liabilities" means Indebtedness of RBC and its
consolidated subsidiaries which would in accordance with generally
accepted accounting principles in the United States be classified as
current liabilities of a corporation conducting a business the same
as or similar to the business of RBC and its consolidated
subsidiaries; provided, however, that in determining current
liabilities, (i) current maturities of long term indebtedness
(including principal and interest) and (ii) obligations of the
Borrowers to the Lender shall not be taken into account.
"Facility A Maturity Date" means December 31, 1995.
"Installment Payment Dates" means the dates of payments of
installments of principal outstanding under Facility A referred to in
Section 10.2(a) hereof.
"Interest Payment Date" means as to Facility A, the last
Business Day of each Interest Period and as to Facility C, it means
June 1, 1995, September 1, 1995, December 1, 1995 and December 31,
1995.
"Interest Period" means each period selected by RBC in
connection with Facility A, the most recent of which commenced on
December 31, 1994 and shall end on June 30, 1995 and the remaining
being the periods of time which begin on the date immediately after
the expiration of the preceding Interest Period and end on the day
selected by RBC which is either one, two, three or six months after
such date; provided, however, that no Interest Period shall extend
beyond the Facility A Maturity Date.
"Security Deposits" means the deposits required to be made by
the Borrowers with the Lender pursuant to Sections 3.2(c)(ii), 5.1,
6.1, 7.1, 10.4, 10.8(a), 10.8(b)(iii)(C), 10.9(b) and 17.1 hereof
(b) adding the following definitions in appropriate alphabetical
order:
"CIT Loan" means the Revolving/Term Loan Agreement and First
Preferred Ship Mortgages financing in the approximate amount of USD
25,000,000 entered into on May 25, 1995 (and which amount may be
increased by an amount not to exceed USD 5,000,000 without consent of
the Lender) by and between Reading & Bates Offshore, Limited and The
CIT Group/Equipment Financing, Inc., and which is guaranteed by RBC
or an affiliate thereof.
"Facility D Maturity Date" means December 31, 1995.
"Facility E Maturity Date" means December 31, 1995.
"Facility F Maturity Date" means December 31, 1995.
2. Facility A. Section 2 of the Credit Agreement is hereby amended by
deleting Exhibit A-1 referred to in Section 2.2 and attached to the Credit
Facility in its entirety and substituting in lieu thereof Exhibit A-1
attached hereto.
3. Facility B. Section 3.2 of the Credit Agreement is hereby amended by
adding the following subsection 3.2(c), to be inserted after subsection
3.2(b):
"(c) On the Facility C Maturity Date, the Borrowers shall
either: (i) purchase or cause a Person to purchase all of Lender's
interests in the Charter Notes (at a price which equals the outstanding
principal and interest on Lender's interest in the Charter Notes
representing payments of Alternative Basic Hire or Regular Basic Hire,
as such terms are defined in the Charters) or (ii) deposit as cash
collateral security in an interest bearing account with the Lender the
full amount of Lender's interests in the Charter Notes (including
without limitation the outstanding principal and interest on Lender's
interest in the Charter Notes representing payments of Alternative Basic
Hire or Regular Basic Hire, as such terms are defined in the Charters)
(such deposit, which is a Security Deposit, and any interest earned
thereon will be returned to the Borrowers upon the payment of all
obligations under Lender's interest in the Charter Notes)."
4. Facility D. Section 5 of the Credit Agreement is hereby amended by:
(a) deleting Section 5.1 in its entirety and substituting in lieu
thereof the following Section 5.1:
"5.1 Letter of Credit. On the terms and subject to the
conditions hereof, the Lender has issued a standby letter of credit
in the amount of USD 5,000,000 for the account of RBC in
substantially the form attached as Exhibit H-1 hereto for a term of
which shall not extend beyond April 30, 1996. Notwithstanding the
foregoing, the parties hereto hereby agree that on the Facility D
Maturity Date, the Borrowers shall: (i) pay in full to the Lender
all amounts outstanding under Facility D and (ii) either (x) return
the Facility D Letter of Credit to the Lender, terminating all of
Lender's obligations thereunder, or (y) deposit as cash collateral
security in an interest bearing account with the Lender the full
amount of Lender's obligations under the Existing Facility D Letter
of Credit (such deposit, which is a Security Deposit, and any
interest earned thereon will be returned to the Borrowers upon the
repayment of all amounts due under this Agreement and the termination
of all Letters of Credit), or (z) provide a standby letter of credit
or bank guarantee in favor of Lender in an amount equal to the amount
of the Facility D Letter of Credit, having an expiration date no
earlier than 30 days after the expiration date of the Facility D
Letter of Credit and otherwise in form and substance, and issued by a
bank or other financial institution, satisfactory to Lender in its
sole discretion, to secure Borrowers' obligations to make a Facility
D Guarantee Payment."; and
(b) deleting Section 5.2 in its entirety and substituting in lieu
thereof the following Section 5.2:
"5.2 Counter Indemnity. The Borrowers jointly and severally
agree to reimburse the Lender a sum equal to any amount paid out by
the Lender as a result of any drawing under the Facility D Letter of
Credit (a "Facility D Guarantee Payment") within thirty (30) days of
any Facility D Guarantee Payment; provided, however, that all amounts
outstanding under Facility D shall be paid in full on the Facility D
Maturity Date.".
5. Facility E. Section 6 of the Credit Agreement is hereby amended by:
(a) deleting Section 6.1 in its entirety and substituting in lieu
thereof the following Section 6.1:
"6.1 Letters of Credit. On the terms and subject to the
conditions hereof, the Lender hereby agrees that prior to the
Facility E Maturity Date it will issue standby letters of credit in a
total amount not to exceed at any time USD 15,000,000 for the account
of any Borrower in substantially the form attached as Exhibit H-2
hereto or in such other form as shall be acceptable to the Lender
with expiration dates on or before December 31, 1996 and Lender
agrees to consider, in its sole discretion without any obligation
whatsoever, the issuance of such letters of credit up to a maximum
aggregate (including any letters of credit with expiry dates beyond
December 31, 1996 granted under Facility F) of USD 1,000,000 and
having expiry dates on or before June 30, 1997. Within such USD
15,000,000 limit the Borrowers may request new Facility E Letters of
Credit with expiration dates on or before December 31, 1996 to be
issued by the Lender as old Facility E Letters of Credit terminate or
expire. Notwithstanding the foregoing, to the extent that there are
any Facility E Letters of Credit outstanding with expiration dates
after the Facility E Maturity Date (the "Existing Facility E Letters
of Credit"), on the Facility E Maturity Date the Borrowers shall:
(i) pay in full all amounts outstanding under Facility E and
(ii) either (x) return the Existing Facility E Letters of Credit to
the Lender, terminating all of Lender's obligations thereunder, or
(y) deposit as cash collateral security in an interest bearing
account with the Lender the full amount of Lender's obligations under
the Existing Facility E Letters of Credit (such deposit, which is a
Security Deposit, and any interest earned thereon will be returned to
the Borrowers upon the repayment of all amounts due under this
Agreement and the termination of all Letters of Credit), or (z)
provide a standby letter of credit or bank guarantee in favor of
Lender in an amount equal to the amount of each such Facility E
Letter of Credit, having an expiration date no earlier than 30 days
after the expiration date of such Facility E Letter of Credit and
otherwise in form and substance, and issued by a bank or other
financial institution, satisfactory to Lender in its sole discretion,
to secure Borrowers' obligation to make a Facility E Guarantee
Payment with respect to such Facility E Letter of Credit."; and
(b) deleting Section 6.2 in its entirety and substituting in lieu
thereof the following Section 6.2:
"6.2 Counter Indemnity. The Borrowers jointly and severally
agree to reimburse the Lender a sum equal to any amount paid out by
the Lender as a result of any drawing under any Facility E Letter of
Credit (a "Facility E Guarantee Payment") within thirty (30) days of
any Facility E Guarantee Payment; provided, however, that all amounts
outstanding under Facility E shall be paid in full on the Facility E
Maturity Date.".
6. Facility F. Section 7 of the Credit Agreement is hereby amended by:
(a) deleting Section 7.1 in its entirety and substituting in lieu
thereof the following Section 7.1:
"7.1 Letters of Credit. On the terms and subject to the
conditions hereof, the Lender has issued and hereby agrees that prior
to the Facility F Maturity Date it will issue standby letters of
credit to obtain customs bonds respecting duties assessed on the
Borrowers' drilling equipment or rigs in Indonesia in a total amount
not to exceed at any time USD 15,000,000 or its counter value in
Indonesian Rhupias, for the account of any Borrower in substantially
the form attached as Exhibit H-3 hereto or in such other form as
shall be acceptable to the Lender for a term of which shall not
extend beyond December 31, 1996 and Lender agrees to consider, in its
sole discretion without any obligation whatsoever, the issuance of
such letters of credit up to a maximum aggregate of USD 1,000,000
(including any letters of credit with expiry dates after December 31,
1996 granted under Facility E) having expiry dates on or before June
30, 1997. Notwithstanding the foregoing, to the extent that there
are any Facility F Letters of Credit outstanding with expiration
dates after the Facility F Maturity Date (the "Existing Facility F
Letters of Credit"), on the Facility F Maturity Date the Borrowers
shall: (i) pay in full all amounts outstanding under Facility F and
(ii) either (x) return the Existing Facility F Letters of Credit to
the Lender, terminating all of Lender's obligations thereunder, or
(y) deposit as cash collateral in an interest bearing account with
the Lender the full amount of Lender's obligations under the Existing
Facility F Letters of Credit (such deposit, which is a Security
Deposit, and any interest earned thereon will be returned to the
Borrowers upon the repayment of all amounts due under this Agreement
and the termination of all Letters of Credit), or (z) provide a
standby letter of credit or bank guarantee in favor of Lender in an
amount equal to the amount of each such Facility F Letter of Credit,
having an expiration date no earlier than 30 days after the
expiration date of such Facility F Letter of Credit and otherwise in
form and substance, and issued by a bank or other financial
institution, satisfactory to Lender in its sole discretion, to secure
Borrowers' obligation to make a Facility F Guarantee Payment with
respect to such Facility F Letter of Credit."; and
(b) deleting Section 7.2 in its entirety and substituting in lieu
thereof the following Section 7.2:
"7.2 Counter Indemnity. The Borrowers jointly and severally
agree to reimburse the Lender a sum equal to any amount paid out by
the Lender as a result of any drawing under either Facility F Letter
of Credit (a "Facility F Guarantee Payment") within thirty (30) days
of any Facility F Guarantee Payment; provided, however, that all
amounts outstanding under Facility F shall be paid in full on the
Facility F Maturity Date.".
7. Interest. Section 9 of the Credit Agreement is hereby amended by:
(a) deleting subsection 9.1(c) in its entirety and substituting in
lieu thereof the following subsection 9.1(c):
"(c) For Facility A, RBC shall elect an Interest Period by
delivering written notice to the Lender not less than three (3)
Business Days prior to the beginning of any Interest Period,
provided, however, that if no such notice shall be given, such
Interest Period shall be one month.";
(b) deleting the first paragraph of subsection 9.1(d) in its
entirety and substituting in lieu thereof the following first paragraph
of subsection 9.1(d):
"(d) All Interest Periods shall end on March 31, June 30,
July 31, August 31, September 30, October 31, November 30 or December
31; provided, however, that:"; and
(c) deleting Section 9.2 in its entirety and substituting in lieu
thereof the following Section 9.2:
"9.2 Payment of Interest. Interest shall be paid by the
relevant Borrowers as follows:
(a) In respect of the unpaid principal amount outstanding
under Facility A, on the last day of each Interest Period; provided,
however, that all amounts of unpaid Interest outstanding under
Facility A shall be paid in full on the Facility A Maturity Date.
(b) In respect of the unpaid principal amounts outstanding
under Facility C, in arrears, on June 1, 1995, September 1, 1995,
December 1, 1995 and December 31, 1995; provided, however, that all
amounts of unpaid Interest outstanding under Facility C shall be paid
in full on the Facility C Maturity Date.
(c) In respect of any Guaranty Payment under Facility D,
Facility E or Facility F interest from the date of such Guarantee
Payment up to the date such amount is paid by the relevant Borrowers
on the date such payment is made; provided, however, that all amounts
of unpaid Interest outstanding under Facility D, Facility E and
Facility F shall be paid in full on the Facility D Maturity Date, the
Facility E Maturity Date and the Facility F Maturity Date,
respectively."
8. Payments; Repayment. Subsection (a) of Section 10.2 of the Credit
Agreement is hereby amended by deleting such subsection in its entirety
and substituting in lieu thereof the following:
"(a) All amounts of principal outstanding under Facility A
shall be repaid in an installment in the amount of USD 3,750,000 on June
30, 1995, with a final installment in an amount sufficient to repay all
amounts outstanding under Facility A due on the Facility A Maturity
Date."
9. Affirmative Covenants of Borrowers. Section 15 of the Credit
Agreement is hereby amended by deleting the first paragraph of such
Section in its entirety and substituting in lieu thereof the following:
"Until the payment in full of all amounts due under this Agreement
and the Notes by the Borrowers and the expiration of all Letters of
Credit, unless compliance shall have been waived by the Lender in
writing in the Lender's sole discretion, the Borrowers agree that:"
10. Negative Covenants of Borrowers. Section 16 of the Credit
agreement is hereby amended by:
(a) deleting the first paragraph of Section 16 in its entirety and
substituting in lieu thereof the following:
"Until the payment in full of all amounts due under this
Agreement and the Notes by the Borrowers and the expiration of all
Letters of Credit, without the prior written consent of the Lender
(which consent shall be in the sole discretion of the Lender), the
Borrowers agree they will not:";
(b) deleting subsection 16.1(f) and the paragraph following
subsection 16.1(f) in their entirety and substituting in lieu thereof
the following:
"(f) liens incurred on the jack-up drilling rigs "F.G.
McClintock" and "George H. Galloway" pursuant to the CIT Loan in
substantially the form of Exhibit O hereto; and
(g) liens existing as of the date of this Agreement and
disclosed in writing to the Lender.
Notwithstanding anything in this Section 16.1 to the contrary,
in no event shall the liens, encumbrances and security interests
permitted by this Section 16.1 materially impair (in the opinion of
the Lender in its sole discretion) the business of financial
condition of the Borrowers or the value of the properties of the
Borrowers taken as a whole.";
(c) deleting subsection 16.5(e) in its entirety and substituting in
lieu thereof the following subsection 16.5(e):
"(e) the CIT Loan; and";
(d) adding the following subsection 16.5(f):
"(f) indebtedness, whether for borrowed money or otherwise,
incurred by Borrowers substantially simultaneously with the
complete repayment and/or other complete satisfaction of
Borrowers' obligations to Lender on or before the maturity of
all Facilities under this Agreement, as amended and restated.";
and
(e) adding the following Section 16.18, to be inserted after Section
16.17 of the Credit Agreement:
"16.18 CIT Loan.
(a) Enter into any amendments to the CIT Loan (other
than to increase the amount of the CIT Loan by up to an additional
USD 5,000,000), including any material agreements in connection
therewith, without the prior written consent and approval of the
Lender.
(b) Use the cash flow to be generated by the
"F.G. McClintock" and "George H. Galloway" drilling rigs that will
collateralize the CIT Loan to repay the obligations under or to
collateralize any loan other than the CIT Loan or the Facilities
described in this Agreement."
11. Exhibit O. The Credit Agreement is hereby amended by attaching
as Exhibit O copies of the first preferred ship mortgages executed in
connection with the CIT Loan.
12. Representations and Warranties. Borrowers, without limiting the
representations and warranties provided in the Credit Agreement, represent
and warrant to the Lender as follows:
(a) The execution, delivery and performance by the Borrowers of this
Amendment and the Second Amended and Restated Facility A Promissory Note
have been duly authorized by all necessary action on the part of each of
the Borrowers and do not and will not (i) violate any provision of any
Borrower's articles of incorporation, by-laws, or other organizational
documents or any Applicable Law, or (ii) be in conflict with, result in
a breach of, or constitute (following notice or lapse of time or both) a
default under any agreement to which any Borrower is a party or by which
any Borrower or any of its property is bound.
(b) This Amendment and the Second Amended and Restated Facility A
Promissory Note create legal, valid and binding obligations of each of
the Borrowers enforceable against each of the Borrowers in accordance
with its terms, subject to laws affecting creditors' rights generally
and applicable equitable legal principles.
(c) No Event of Default or event which with the giving of notice or
lapse of time or both would constitute an Event of Default exists.
(d) All representations and warranties by the Borrowers contained in
the Credit Agreement, as amended hereby, are true and correct in all
material respects with the same effect as though such representations
and warranties had been made on and as of the date hereof.
13. Credit Agreement Ratified and Confirmed. Except as expressly
amended and modified herein, all terms and covenants and provisions of the
Credit Agreement and all Loan Documents shall remain unaltered and in full
force and effect, and the parties hereto do expressly ratify and confirm
the Credit Agreement and all Loan Documents as modified herein. All
future references to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended hereby.
14. Expenses. The Borrowers agree to pay on demand all reasonable
costs and expenses of the Lender in connection with the preparation, ex-
ecution and delivery of this Amendment and the other instruments and
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Lender with
respect thereto and with respect to advising the Lender as to its rights
and responsibilities hereunder and thereunder.
15. Conditions Precedent. This Amendment shall be effective upon
receipt by the Lender of all of the following, each in form and substance
satisfactory to the Lender:
(a) Fully executed counterparts of this Amendment.
(b) Fully executed Second Amended and Restated Facility A Promissory
Note, substantially in the form of Exhibit A-1 attached hereto.
(c) Certified copies of the resolutions of the Boards of Directors
of each of the Borrowers authorizing the execution and delivery by each
of the Borrowers of this Amendment and the Second Amended and Restated
Facility A Promissory Note on behalf of each of the Borrowers, and all
documents evidencing other necessary corporate action with respect to
this Amendment.
(d) Certificate of the Secretary or the Assistant Secretary of each
Borrower certifying the names and true signatures of the officers of
each Borrower authorized to sign this Amendment and the Second Amended
and Restated Facility A Promissory Note on behalf of such Borrower and
the other documents or certificates to be executed by such Borrower
pursuant to this Amendment.
(e) Copies certified as of a recent date by the Secretary or the
Assistant Secretary of each Borrower of its By-Laws.
(f) A copy of each Borrower's Certificate of Incorporation certified
by the Secretary of State of the state of incorporation within
thirty (30) days from the date of this Amendment and certificates dated
as of a recent date of the Secretary of State of the state of
incorporation as to the existence and good standing of each Borrower.
(g) An opinion of counsel to the Borrowers in form and substance
acceptable to the Lender.
(h) If the date of this Amendment is not a Drawdown Date, a
certificate dated the first Drawdown Date of an officer of each of the
Borrowers certifying that:
(i) The representations and warranties contained in Section
14 of the Credit Agreement are correct on and as of the Drawdown
Date as though made on and as of such date; and
(ii) No event has occurred and is continuing, or would
result from the Advance, or the issuance of a Letter of Credit
which constitutes an Event of Default or with the passing of
time or the giving of notice would constitute an Event of
Default.
(i) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and
exemptions by any Governmental Agency or any Person (other than any
routine filings which may be required after the date hereof with
appropriate governmental authorities in connection with the operation
of the Rigs) required to (i) authorize the execution, delivery and
performance by the Borrowers of this Amendment and the Second Amended
and Restated Facility A Promissory Note or (ii) prevent the execution,
delivery and performance by the Borrower of this Amendment or the Second
Amended and Restated Facility A Promissory Note from resulting in a
breach of any of the terms or conditions of, or resulting in the
imposition of any lien, charge or encumbrance upon any properties
of the Borrowers pursuant to, or constituting a default (with due notice
or lapse of time or both), if such breach, imposition or default would
result in a materially adverse change in the financial position of the
Borrowers, or resulting in an occurrence of any event for which any
holder or holders of Indebtedness may declare the same due and payable
under, any indenture, agreement, order, judgment or instrument under
which any Borrower is a party (other than the Mortgage, the Pledges or
the Assignments) or to the Borrowers' knowledge after due inquiry by
which the Borrowers or their property may be bound or affected, or under
the Certificates of Incorporation or By-Laws of the Borrowers, shall
have been obtained or made.
(j) The CIT Loan shall have been closed and the Lender shall have
have received copies of all of the material agreements executed in
connection therewith in a form satisfactory to the Lender.
16. Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
17. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York,
notwithstanding any principles regarding conflicts of laws thereof.
18. Entire Agreement. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein,
and shall supersede any prior negotiations or agreements, whether written
or oral, with respect thereto.
19. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts and
may be delivered by telecopier. Each counterpart so executed and
delivered shall be deemed an original and all of which taken together
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment through their authorized officers as of the date first above
written.
READING & BATES CORPORATION
By:______________________________
Name: T. W. Nagle
Title: Vice President and Chief
Financial Officer
READING & BATES DRILLING CO.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO DRILLING
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto
affixed by authority of By: ______________________________
the Board of Directors Name: T. W. Nagle
in the presence of: Title: Director
_________________________
T. W. Nagle, Director
__________________________
W. K. Hillin, Secretary
INTERNATIONALE NEDERLANDEN
BANK N.V.
By:_________________________
Name:
Title:
<PAGE>
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
SECOND AMENDED AND RESTATED FACILITY A PROMISSORY NOTE
USD 15,000,000 July 31, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING AND
BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD. (the
"Facility A Borrowers") hereby jointly and severally promise to pay to
INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, on or
before December 31, 1995 in installments, or otherwise, as hereinafter
provided, FIFTEEN MILLION DOLLARS OF THE UNITED STATES OF AMERICA (USD
15,000,000) and to pay interest on the unpaid portion of said principal
sum outstanding from time to time, as hereinafter provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit Facility
Agreement dated as of April 27, 1995, as amended by that certain First
Amendment to the Amended and Restated Credit Facility Agreement dated as
of July 31, 1995 (collectively, the "Credit Agreement") among the Facility
A Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section 9.3
of the Credit Agreement shall be payable on all overdue principal and, to
the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the Credit
Agreement.
1.3 The principal of this Note shall be payable in installments as
provided in Section 10.2(a) of the Credit Agreement. All principal
payments shall be made to the Lender at its Amsterdam Branch Office in
Amsterdam South East, The Netherlands as provided in Section 10.5 of the
Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary it is the
intent of the Facility A Borrowers and the Payee that, in no event shall
the aggregate amount of consideration which constitutes interest under any
applicable law which is contracted for, charged or received hereunder or
under this Note ("Interest") exceed the maximum amount of nonusurious
interest allowed by law, and any excess shall be credited on this Note (or
if all obligations under this Note shall have been paid in full, refunded
to the Facility A Borrowers). For purposes of the foregoing, the maximum
amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged, or received
during the term hereof at the maximum rate of nonusurious interest allowed
from time to time by applicable law as is now or, to the extent allowed by
law, as may hereafter be in effect (the "maximum nonusurious interest
rate") and, if at any time the rate of Interest to accrue would exceed the
maximum nonusurious interest rate, the rate of Interest to accrue under
this Note shall be limited to the maximum nonusurious interest rate, but
any subsequent reductions in LIBOR shall not reduce the rate of Interest
to accrue on this Note below the maximum nonusurious interest rate until
the total amount of Interest accrued and paid on this Note equals the
amount of Interest which would have accrued if a rate per annum equal to
LIBOR plus 1-1/2% or the interest rate charged pursuant to Section 9.3 of
the Credit Agreement, whichever is applicable, had at all times been in
effect. It is further agreed that, without limitation of the foregoing,
all calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest
rate applicable to the Payee, shall be made to the extent possible
permitted by usury laws applicable to the Payee (now or hereafter enacted)
by amortizing, prorating and spreading all Interest in equal parts during
the period of the full stated term of the obligations evidenced by this
Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant to
the Credit Agreement and is secured by, among other things, U.S. preferred
Mortgages dated March 29, 1991, as amended, on nine U.S. flag drilling
rigs, a Panamanian First Naval Mortgage dated April 27, 1995, on one
Panamanian flag drilling rig and one Australian First Registered Ship
Mortgage dated April 27, 1995 on one Australian flag drilling rig, all in
favor of Bank One, Texas, N.A., as Trustee for the Payee (the
"Mortgages"). Reference is hereby made to the Mortgages for a description
of the property thereby mortgaged, the nature and extent of the security
afforded thereby and the rights of the Facility A Borrowers and the Payee
with respect to such security as provided in the Mortgages. Payment of
this Note may be demanded by the holder hereof prior to the maturity of
this Note under certain circumstances and conditions, in the manner, and
with the effect, provided in the Mortgages or the Credit Agreement. A
true and complete copy of the form of the Credit Agreement is attached to
the Mortgages and made a part thereof.
2.2 This Note evidences the Advance made by the Payee under Facility A of
the Credit Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Facility A Borrowers and the Payee
in exercising any rights hereunder shall operate as a waiver of any right
of any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a day which
is not a Business Day, such payments shall be made on the next Business
Day; provided, however, that if such next succeeding Business Day is in a
new month, then the payment required under the Credit Agreement or this
Note shall be made on the first Business Day preceding the original date
on which payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the payee
to charge the higher of the rate permitted by such applicable law or by
the laws of the state in which the Payee is located shall be deemed
"governing and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall have
the meanings given to them in the Credit Agreement.
3.7 This Note amends and restates that certain Amended and Restated
Facility A Promissory Note dated April 27, 1995 made by the Facility A
Borrowers in favor of the Payee in the original principal amount of USD
15,000,000, and is not being given by the Facility A Borrowers or accepted
by the Payee in satisfaction of said indebtedness or as a novation with
respect thereto.
IN WITNESS WHEREOF, the Facility A Borrowers have caused this
Second Amended and Restated Facility A Promissory Note to be duly executed
the day and year first above written.
READING & BATES CORPORATION
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO DRILLING
By:______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto
affixed by authority of By: ______________________________
the Board of Directors Name: T. W. Nagle
in the presence of: Title: Director
_________________________
T. W. Nagle, Director
__________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT 10.2
MEMORANDUM OF AGREEMENT
SALEFORM 1993
Dated: August 31, 1995
FPS II, Inc., as holder of legal title for the benefit of DeepFlex
Production Partners, L.P. hereinafter called the Sellers, have agreed to
sell, and Reading & Bates (U.K.) Limited hereinafter called the Buyers,
have agreed to buy
Name: FPS EDDIE DELAHOUSSAYE (ex- TREASURE DRILLER)
Classification Society/Class: DnV/+1A1 Column Stabilized Unit, Drilling
Vessel
Built: 1974 By: Bethlehem Beaumont, Texas
Flag: Bahamas Place of Registration: Nassau, Commonwealth of Bahamas
Call Sign: C6IF8 Grt/Nrt: 9199/7267
Register Number:
hereinafter called the Vessel, on the following terms and conditions:
Definitions
"Banking days" are days on which banks are open both in the country of
the currency stipulated for the Purchase Price in Clause 1 and in the
place of closing stipulated in Clause 8.
"In writing" or "written" means a letter handed over from the Sellers to
the Buyers or vice versa, a registered letter, telex, telefax or other
modem form of written communication.
"Classification Society" or "Class" means the Society referred to above.
1. Purchase Price EIGHTEEN MILLION DOLLARS (U.S. $18,000,000.-)
2. Deposit None
3. Payment
The Purchase Price shall be comprised of: (a) a cash portion of
$3,000,000, (b) a waiver and release by Buyers' affiliates of receivables
amounting to $292,319 owing to Buyers' affiliates by Sellers' affiliates,
substantially in the form attached as Exhibit "A" of this Agreement, to
be delivered by Buyers at closing and (c) a certificate representing
1,232,057 shares of the common stock of Reading & Bates Corporation
("RBC") (the "Shares") to be delivered by Buyers at closing. The rights
and obligations of the parties with respect to the Shares are as set out
in the Common Stock Issuance Agreement to be executed and delivered by
Sellers and RBC concurrently upon execution of this Agreement,
substantially in the form attached as Exhibit "B" to this Agreement.
The cash portion of said Purchase Price shall be paid in full free of
bank charges to Sellers' account (at a bank designated by Sellers in
writing to Buyers within 5 U.S. business days from the date of this
Agreement) at closing on delivery of the Vessel, but not later than 3
banking days after the Vessel is in every respect physically ready for
delivery in accordance with the terms and conditions of the Agreement and
Notice of Readiness has been given in accordance with Clause 5.
4. Inspections
a) The Buyers have inspected and accepted the Vessel's classification
records. The Buyers have also inspected the Vessel at/in
Invergordon, Scotland on August 29, 1995 and have accepted the
vessel following this inspection and the sale is outright and
definite, subject only to the terms and conditions of this
Agreement.
b) Deleted
5. Notices, time and place of delivery
a) Deleted
b) The Vessel shall be delivered and taken over safely afloat at its
present location at Invergordon, Scotland.
Expected time of delivery: September 15, 1995
Date of cancelling (See Clauses 5 c) and 14):October 31, 1995
c) Should the Vessel become an actual, constructive or compromised
total loss before delivery, this Agreement shall be null and void,
and none of the parties shall have any liability or obligation
hereunder. In the event the Vessel suffers damage before the
delivery and such damage does not constitute an actual,
constructive or compromised total loss, and Sellers determine that
such damage cannot be repaired prior to October 31, 1995, the
Sellers shall notify the Buyers in writing stating the date on
which Sellers anticipate the Vessel will be ready for delivery and
proposing a new cancelling date. Within 5 business days of the
receipt of such notification, the Buyers shall have the option of
either cancelling this Agreement, without further liability to
either party, or accepting such new cancelling date proposed in
Sellers' notification. This new cancelling date shall be further
extended to the extent that the Vessel is not repaired on or before
such date due to reasons of force majeure.
d) Deleted
6. Deleted
7. Spares/bunkers, etc.
The Sellers shall deliver the Vessel to the Buyers with everything
belonging to her on board and on shore. All spare parts and spare
equipment including spare thruster shafts(s) and/or spare
propeller(s)/propeller blade(s), if any, belonging to the Vessel at the
time of inspection used or unused, whether on board or not shall become
the Buyers' property, but unpaid spares on order are to be excluded.
Forwarding charges, if any, shall be for the Buyers' account. The
Sellers are not required to replace spare parts including spare thruster
shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of
spare and used as replacement prior to delivery, but the replaced items
shall be the property of the Buyers. The radio installation and
navigational equipment shall be included in the sale without extra
payment if they are the property of the Sellers. Unused stores and
provisions shall be included in the sale and be taken over by the Buyers
without extra payment.
The Sellers have the right to take ashore crockery, plates, cutlery,
linen and other articles bearing the Sellers' flag or name, provided they
replace same with similar unmarked items. Library, forms, etc.,
exclusively for use in the Sellers' vessel(s), shall be excluded without
compensation. Captain's, Officers' and Crew's personal belongings
including the slop chest are to be excluded from the sale, as well as the
following additional items (including items on hire): Leased or third
party owned equipment, if any, temporarily installed on the Vessel.
The Buyers shall take over the remaining bunkers and unused lubricating
oils in storage tanks and sealed drums.
8. Documentation
The place of closing:
In exchange for payment of the Purchase Price the Sellers shall furnish
the Buyers with delivery documents, namely:
a) Legal Bill of Sale in a form recordable in The Bahamas (the country
in which the Buyers are to register the Vessel), warranting that
the Vessel is free from all encumbrances, mortgages and maritime
liens or any other debts or claims or liens whatsoever, duly
notarially attested and legalized by the consul of such country or
other competent authority.
b) Current Certificate of Ownership issued by the competent
authorities of the flag state of the Vessel.
c) Deleted
d) Current Certificate issued by the competent authorities stating
that the Vessel is free from registered encumbrances.
e) Certificate of Deletion of the Vessel from the Vessel's registry or
other official evidence of deletion appropriate to the Vessel's
registry at the time of delivery, or, in the event that the
registry does not as a matter of practice issue such documentation
immediately, a written undertaking by the Sellers to effect
deletion from the Vessel's registry forthwith and furnish a
Certificate or other official evidence of deletion to the Buyers
promptly and latest within 4 (four) weeks after the Purchase Price
has been paid and the Vessel has been delivered.
f) Any such additional documents as may reasonably be required by the
competent authorities for the purpose of registering the Vessel,
provided the Buyers notify the Sellers of any such documents as
soon as possible after the date of this Agreement. The additional
documentation listed in Clause 17 below.
At the time of delivery the Buyers and Sellers shall sign and deliver to
each other a Protocol of Delivery and Acceptance confirming the date and
time of delivery of the Vessel from the Sellers to the Buyers.
At the time of delivery the Sellers shall hand to the Buyers the files
and records as well as all plans etc., specifications, drawings ("as
built"), operation and other manuals pertaining to the Vessel and her
equipment which are on board the Vessel. Other certificates which are on
board the Vessel shall also be handed over to the Buyers unless the
Sellers are required to retain same, in which case the Buyers to have the
right to take copies. Other technical documentation which may be in the
Sellers' possession shall be promptly forwarded to the Buyers at their
expense, if they so request. The Sellers may keep the Vessel's log books
but the Buyers to have the right to take copies of same. Buyers
acknowledge that sellers have done engineering work and drawings that
relate to the conversion of the Vessel to a floating production system.
Such work and drawings are not a part of this sale and shall remain the
exclusive property of Sellers.
9. Encumbrances
The Sellers warrant that the Vessel, at the time of delivery, is free
from all charters, encumbrances, mortgages and maritime liens or any
other debts or liens whatsoever. The Sellers hereby undertake to defend
and indemnify the Buyers against all consequences of claims made against
the Vessel which have been incurred prior to the time of delivery.
10. Taxes, etc.
Any taxes, fees and expenses in connection with the purchase and
registration under the Buyers' flag shall be for the Buyers' account,
whereas similar charges in connection with the closing of the Sellers'
register shall be for the Sellers' account. Any taxes, charges, fees,
customs duties or other charges arising as a result of the sale of the
Vessel hereunder shall be for the Sellers' account.
11. Condition on delivery
The Vessel with everything belonging to her shall be at the Sellers' risk
and expense until she is delivered to the Buyers, but subject to the
terms and conditions of the Agreement she shall be delivered and taken
over as she was at the time of inspection, fair wear and tear excepted
free and clear of all debts, liens and encumbrances of whatever nature.
"Inspection in this Clause 11 shall mean the Buyers' inspection according
to Clause 4 a), if applicable, or the Buyers' inspection prior to the
signing of this Agreement. If the Vessel is taken over without
inspection, the date of the Agreement shall be the relevant date.
* Notes, if any, in the surveyor's report which are accepted by the
Classification Society without condition/recommendation are not to
be taken into account.
12. Name/markings
Upon delivery the Buyers undertake to change the name of the Vessel and
alter funnel markings.
13. Buyers' default
In the event Buyers shall default in the performance of this Agreement,
Sellers may at their option cancel this Agreement, in addition to any
other right or remedy available at law or equity.
14. Sellers' default
In the event Sellers shall default in the performance of this Agreement,
Buyers may at their option cancel this Agreement, in addition to any
other right or remedy available at law or equity.
15. Buyers' representatives
After this Agreement has been signed by both parties and the deposit has
been lodged, the Buyers have the right to place two representatives on
board the Vessel at their sole risk and expense. These representatives
are on board for the purpose of familiarization and in the capacity of
observers only, and they shall not interfere in any respect with the
operation of the Vessel. The Buyers' representatives shall sign the
Sellers' letter of indemnity prior to their embarkation.
16. Arbitration
a) Deleted
b) This Agreement shall be governed by and construed in accordance
with Title 9 of the United States Code and the Law of the State of
New York and should any dispute arise out of this Agreement, the
matter in dispute shall be referred to three persons at New York,
one to be appointed by each of the parties hereto, and the third by
the two so chosen; their decision or that of any two of them shall
be final, and for purpose of enforcing any award, this Agreement
may be made a rule of the Court.
The proceeding shall be conducted in accordance with the rules of
the Society of Maritime Arbitrators, Inc. New York.
c) Deleted
17. Additional Closing Documentation
At the time of delivery of the vessel, the Sellers shall provide to the
Buyers the following documents (in addition to those required elsewhere
in this Agreement) in form and substance reasonably satisfactory to
Buyers:
a. Certified and notarized true copies of Sellers' board
resolutions authorizing sale of the Vessel;
b. Sellers' power of attorney notarized (and legalized by the
Bahamanian consul, if required by laws of Bahamas); and
c. Certificate of Encumbancy.
18. Indemnification
Sellers agree to defend, indemnify and hold harmless Buyers, their
parent, subsidiary and affiliated companies, their agents, directors,
officers and employees, and each of them (collectively the "Buyers'
Group"), from any and all claims, demands, actions, damages, losses and
expenses, including court costs and reasonable attorneys' fees, for loss,
damage or injury (including death resulting therefrom) to person or
property, whether in tort or contract, arising out of, incidental to, or
in connection with operations of the Vessel at any time prior to the
delivery of the Vessel by the Sellers to the Buyers hereunder, regardless
of whether any such claim, demand or action is asserted before or after
such delivery and regardless of whether Buyers Group, or any of them, was
or may be alleged to have been negligent, strictly liable or otherwise
legally responsible.
Buyers agree to defend, indemnify and hold harmless Sellers, their
parent, subsidiary and affiliated companies, their agents, directors,
officers, and employees, and each of them (collectively the "Sellers
Group"), from any and all claims, demands, actions, damages, losses and
expenses, including court costs and reasonable attorneys' fees, for loss,
damage or injury (including death resulting therefrom) to person or
property, whether in tort or contract, arising out of, incidental to or
in connection with operations of the Vessel at any time subsequent to
delivery of the Vessel by the Sellers to the Buyers hereunder, regardless
of whether any such claim, demand or action is asserted before or after
such delivery and regardless of whether the Sellers Group, or any of
them, was or may be alleged to have been negligent, strictly liable or
otherwise legally responsible.
19. Agents and Brokers
Sellers shall be responsible for payment of a one percent (1%) commission
on the Purchase Price payable to Fearnley Offshore AS, which may be paid
in cash or stock (subject to the same terms as applicable to Sellers) to
be received by Sellers pursuant to this Agreement. Except for such
commission, each party represents and warrants that it has not retained
or employed any broker, finder or agent or taken any action that would
give rise to any claim for a commission, finder's fee or other similar
payment with respect to the sale of the Vessel and shall defend,
indemnify and hold harmless the other parties hereto from any and all
claims, demands or causes of action with respect thereto.
20. Consequential Damages
In no event shall either party hereto be liable to the other for loss of
profits, business interruption, loss of production or gains or any other
incidental, consequential or special damages in any manner arising out of
this Agreement.
21. Assignment
This Agreement shall not be assignable, in whole or in part, by either
party hereto, without the prior written consent of the other party
hereto, except that either party may assign all of their rights, title
and interest in this Agreement (including, inter alia, in the case of the
Buyers the right to take delivery of the Vessel subject to the terms of
this Agreement) to any direct or indirect subsidiary or affiliated
company, provided that the assigning party shall remain primarily
responsible for the performance of its duties and obligations under this
Agreement.
22. Additional Closing Documentation - Buyers
Buyers shall deliver at closing the following:
a. Certificate representing 1,232,057 shares of common stock of
Reading & Bates Corporation registered, as specified in the
Common Stock Issuance Agreement, and bearing the restrictive
legend referred to in Section 3(b) of the Common Stock
Issuance Agreement at even date between Sellers and Reading &
Bates Corporation;
b. Corporate resolutions and encumbancy certificates for Buyers
and Reading & Bates Corporation; and
c. Opinion of counsel of Reading & Bates Corporation, in form and
substance reasonably satisfactory to Sellers, that such shares
of common stock of Reading & Bates Corporation to be delivered
at closing have been duly authorized, validly issued and are
fully paid and nonassessable.
23. Condition Subsequent
Sellers' obligations under this Agreement are subject to approval
of the Board of Directors of DeepTech International Inc. and the
Management Committee of DeepFlex Production Partners, L.P. which
Sellers undertake to obtain on or before 5:00 p.m., Central
Daylight Time, September 8, 1995. If such approvals are not
obtained on or before such time, either party shall be entitled to
terminate this Agreement by delivery of written notice to the other
party. Upon delivery of such notice, this Agreement shall be null
and void, and neither party will have any liability or obligation
hereunder.
Reading & Bates Corporation has executed this document to evidence its
direct obligations under Clauses 3 and 22 and to unconditionally
guarantee the obligations of Reading & Bates (U. K.) Limited.
FPS II, Inc., as holder of legal title for
the benefit of DeepFlex Partners, L. P.
By: ________________________________________
Its: _______________________________________
READING & BATES (U. K.) LIMITED
By: ________________________________________
Its: _______________________________________
READING & BATES CORPORATION
By: _________________________________________
Its: _________________________________________
<PAGE>
The undersigned, DeepFlex Partners, L. P., acting through its duly
appointed General Partner, ____________, hereby approves and consents to
FPS II, Inc. entering into the foregoing Memorandum of Agreement, on the
terms and conditions set forth therein, as fully and to the same extent
as had DeepFlex Partners, L.P. been a party thereto.
Date: August 31, 1995 DEEPFLEX PARTNERS, L.P.
By: DeepFlex Holdings L.L.C.
Its: General Partner
By: __________________________
Its: __________________________
EXHIBIT "A"
WAIVER AND RELEASE
FOR VALUE RECEIVED, Reading & Bates Development Co. hereby waives
any and all rights it may have, and releases FPS 1, Inc. from any
liabilities, for payment of the following issued and outstanding
invoices:
<TABLE>
<CAPTION>
Invoice Date Invoice No. Invoice Amount
------------ ----------- --------------
<C> <C> <C>
03/08/95 400-0030 750.00
03/07/95 400-0009 73,747.95
03/08/95 040-0010 6,792.62
04/10/95 040-0011 63,689.25
04/10/95 040-0012 23,410.66
05/09/95 040-0013 20,556.91
06/13/95 040-0014 273.38
03/08/95 430-0010 48,532.09
03/08/95 430-0011 19,329.40
04/10/95 430-0012 34,145.79
04/10/95 430-0013 632.22
05/09/95 430-0014 458.82
-----------
Total Amount of Outstanding Invoices $292,319.09
===========
</TABLE>
IN WITNESS WHEREOF, Reading & Bates Development Co. has caused
this waiver and release to be duly executed, delivered and effective on
this 15th day of September, 1995.
READING & BATES DEVELOPMENT CO.
By: _________________________
Its: _________________________
<PAGE>
EXHIBIT "B"
COMMON STOCK ISSUANCE AGREEMENT
This Common Stock Issuance Agreement (the "Agreement") is dated as
of August 31, 1995, by and between Reading and Bates Corporation (the
"Company") and DeepFlex Production Partners L.P. (the "Purchaser").
Capitalized terms used but not defined herein are used as defined in the
Memorandum of Agreement dated August 31, 1995 between the Company and FPS
II, Inc. on behalf of the Purchaser (the "Purchase Agreement").
Recitals
1. Each of the Company and FPS II, Inc., as holder of legal
title for the benefit of DeepFlex Production Partners L.P. of that
certain semisubmersible drilling rig "FPS EDDIE DELAHOUSSAYE" (EX-
"TREASURE DRILLER") registered in the Commonwealth of Bahamas, has
entered into and agreed to perform the Purchase Agreement.
2. In connection with the transactions contemplated by the
Purchase Agreement, the Company has agreed to issue certain shares (the
"Shares") of its Common Stock, $.05 par value (the "Common Stock"), to
the Purchaser as provided in the Purchase Agreement.
3. The Purchaser has requested that the Company undertake to
register the Shares under the Securities Act of 1933, as amended (the
"Act"), for resale from time to time following the date of the closing
referred to in the Purchase Agreement (the "Closing Date").
Accordingly, in consideration of the premises and the mutual
agreements contained herein and in the Purchase Agreement, the parties
hereto hereby agree as follows:
Section 1. Agreements to Issue and Purchase.
Subject to all the terms and conditions set forth herein and in
the Purchase Agreement, (i) the Company hereby agrees to issue and sell
in a private offering to the Purchaser and (ii) the Purchaser agrees to
acquire from the Company, 1,232,057 Shares.
Section 2. Delivery of the Shares.
Issuance and delivery to the Purchaser (or its nominee as
described in Section 9(i) hereof) of the Shares by the Company shall be
made at the closing referred to in the Purchase Agreement promptly
following the receipt by the Company of listing approval for the Shares
on the New York Stock Exchange. The place and time of delivery for the
Shares may be varied by agreement between the Purchaser and the Company.
Section 3. Legends; Transfer Restrictions.
(a) To insure compliance with the applicable provisions of the
Act and the terms of this Agreement, no Shares shall be sold or
transferred except in a transaction permitted by this Section 3 or
involving the registration of such Shares under the Act.
(b) Except as otherwise provided in Section 3(e) hereof, each
certificate for any Shares shall be issued with a legend in substantially
the following form:
"The transfer of the securities represented by this certificate is
subject to the conditions specified in that certain Common Stock
Issuance Agreement dated as of August 31, 1995, with Reading &
Bates Corporation (the "Company"), as the same may from time to
time be amended. The securities represented by this certificate
have not been registered under the United States Securities Act of
1933, as amended (the "Securities Act"), or under any state
securities or laws and may not be offered or sold unless such
offer or sale is made pursuant to an effective registration
statement under the Securities Act or is made in a transaction
exempt from the registration requirements of the Securities Act
and applicable state securities laws.
(c) Each holder of Shares shall have the right to transfer
Shares (i) to any Person who agrees in writing to take the same subject
to the terms and provisions of this Agreement or (ii) pursuant to Rule
144 or Regulation S under the Act or any successor rule or regulation
thereto; provided, that in the case of clause (i) above, no such transfer
shall be effective unless the written agreement providing for such
transfer includes representations and warranties (expressed to be for the
benefit of the Company as well as all other holders of Shares)
substantially in the form set forth in Section 6 hereof (other than
clause (e) thereof) and signed counterparts of such agreement are
delivered to the Company. Each such transferee shall be subject to the
same transfer restrictions imposed by this Agreement.
(d) Notwithstanding anything to the contrary in this Agreement,
no holder of Shares shall transfer any Shares pursuant to Section 3(c)
hereof, and no such transfer shall be effective, unless such holder has
delivered to the Company an opinion of counsel reasonably satisfactory to
the Company (which counsel may include attorneys who are employees of
such holder) that registration in respect of such transfer is not
required under the Act.
(e) Notwithstanding the foregoing provisions of this Section 3,
all of the restrictions imposed hereby upon the transferability of the
Shares shall terminate as to such Shares when:
(i) they have been registered under the Act and sold in
accordance with such registration; or
(ii) counsel reasonably satisfactory to the Company has rendered
an opinion to the Company that all of the Shares may be freely sold
to the public without compliance with the registration provisions of
the Act or any volume or manner of sale restrictions under Rule 144;
or
(iii) counsel reasonably satisfactory to the Company has rendered
an opinion to the Company that such Shares may be freely sold to the
public without compliance with the registration provisions of the
Act.
Whenever the restrictions imposed by this Section 3 terminate as
to any Shares, the holder thereof shall be entitled to receive from the
Company, upon certification by the holder as to the circumstances of such
termination to the reasonable satisfaction of the Company, without
expense, a new certificate not bearing the legends otherwise required
pursuant to this Section 3.
Section 4. Registration by the Company.
The Company and the Purchaser hereby agree as follows:
(a) The Company undertakes and agrees to take all action
required to permit the holders of the Shares to offer and sell the Shares
pursuant to an effective registration statement covering the Shares (a
"Registration Statement") at all times during the Registration Period (as
defined below) and to ensure that one or more Registration Statement(s)
and any related prospectus (each, a "Prospectus") remain continuously
effective and in full compliance with all applicable provisions of the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and the respective rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder (the "Rules and Regulations")
until the end of the Registration Period. In furtherance of the
foregoing, the Company shall file a "shelf" Registration Statement within
30 days of the Closing Date and shall thereafter use its best efforts to
cause such Registration Statement to be declared effective as soon
thereafter as practicable.
(b) The "Registration Period" shall begin on the date that a
Registration Statement with respect to the Shares is declared effective
and shall continue until terminated by the Company by notice to the
holders of Shares; provided, that the Company shall not terminate the
Registration Period prior to the earlier to occur of (i) the first
anniversary of the date on which the Registration Statement is first
decalared effective or (ii) the sale of all of the Shares pursuant to a
Registration Statement. Notwithstanding the foregoing, the Registration
Period shall be extended by a period of time following such first
anniversary equal to any period of time that offers and sales of Shares
under the Registration Statement are prevented by any stop order,
injunction or other action of the Commission or any Notice of Amendment
pursuant to Section 4(e).
(c) During the Registration Period, the Company will advise
holders of Shares promptly in writing: (i) of any request by the
Commission for amendment of or a supplement to the Registration Statement
or the Prospectus or for additional information; (ii) of the issuance of
any stop order suspending the effectiveness of the Registration Statement
or of the suspension of qualification of the Shares for offering or sale
in any jurisdiction or the initiation of any proceeding for such purpose;
and (iii) of any change in the Company's condition (financial or other)
business, prospects, properties, net worth or results of operations, or
of the happening of any event, which makes any statement of a material
fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any
additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply
with the applicable requirements of the Act or the Exchange Act or the
Rules and Regulations. If at any time a stop order suspending the
effectiveness of the Registration Statement shall be issued, the Company
will make every reasonable effort to obtain the withdrawal of such order
at the earliest possible time.
(d) During the Registration Period, the Company will expeditiously
deliver to each holder of Shares, without charge, such number of copies
of the Registration Statement and the Prospectus and of any amendment or
supplement thereto as each holder of Shares may reasonably request. The
Company consents to the use of the Registration Statement and the
Prospectus and of any current amendment or supplement thereto by each
holder of Shares for non-underwritten resales of Shares during the
Registration Period in accordance with the Act, the Exchange Act and the
Rules and Regulations.
(e) If during the Registration Period any event shall occur that
in the judgment of the Company is required to be set forth in the
Prospectus as then amended or supplemented or should be set forth therein
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus or to file under the
Exchange Act any document which, upon filing, will be incorporated by
reference therein in order to comply with the Act, the Exchange Act or
the Rules and Regulations, the Company will forthwith notify the holders
of Shares in writing of such event or requirement (a "Notice of
Amendment") and prepare and file with the Commission an appropriate
supplement or amendment thereto and furnish copies thereof, together with
a written notice of such amendment or supplement ("Notice of
Correction"), to the holders of Shares. Following any Notice of
Amendment as aforesaid, no holder of Shares shall effect any offer or
sale of Shares prior to receipt from the Company of a Notice of
Correction, which notice shall include a statement that sales of the
Shares are again permitted under the Registration Statement. Each holder
of Shares included in the Registration Statement undertakes and agrees
expeditiously to provide a complete and accurate Holder Questionnaire or
otherwise confirm to the Company any information regarding such holder
included or required to be included in the Registration Statement, to
update such holder's Holder Questionnaire whenever necessary and to
inform the Company in writing of any additions to or other changes in
such information, including any changes in the number of Shares or other
securities of the Company from time to time owned by such holder.
(f) In connection with each Registration Statement, the Company
shall pay all filing fees of the Commission, printing expenses, stock
exchange listing fees, Company counsel and auditor fees (but not fees of
counsel or auditors for the holders of Shares), registrar and transfer
agent fees and "blue sky" and National Association of Securities Dealers,
Inc. fees.
(g) The Company will not take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock in
connection with the issuance of the Shares contemplated hereby.
(h) The Company shall (i) apply to the New York Stock Exchange for
the listing of the Shares thereon prior to the Closing Date, (ii) use its
best efforts to have the Shares approved for listing, subject to notice
of issuance, thereon and (iii) maintain the listing of the Shares thereon
as long as the Common Stock is so listed.
(i) Notwithstanding anything to the contrary in this Agreement,
the Company shall be permitted to effect the registration, issuance,
offer, underwriting and/or sale of securities issued by the Company or
its subsidiaries (whether issued and outstanding prior to or subsequent
to the date hereof) at any time during the Registration Period
(including, without limitation, by including other securities issued by
the Company in a Registration Statement or by extending any existing
shelf registration pursuant to Rule 415 under the Act) and, except as
expressly provided herein, holders of Shares shall not be entitled to
participate in any such registration, offering or transaction without the
Company's prior consent.
(j) In connection with a reasonable and customary due diligence
investigation relating to a Registration Statement, the Company shall
(i) make reasonably available for inspection by holders of Shares and
their attorneys, accountants and other agents and representatives all
relevant financial and other records, corporate documents and properties
and (ii) cause the Company's officers, directors and employees to
cooperate in supplying all information reasonably requested by such
persons; provided, that any information that is designated by the Company
as confidential shall be kept confidential by such persons, unless
disclosure thereof is required by applicable law or regulation or such
information becomes publicly available other than as a result of a breach
hereof by any such person.
(k) In the event that a Registration Statement is effective and
available to the holders for resales of Shares for less than 330 days
during the 365-day period immediately following the Closing Date, at any
time that the Shares are not registered for resale pursuant to an
effective Registration Statement, the Purchaser shall be entitled to one
demand registration and unlimited "piggyback" registrations with respect
to the Shares as provided in this Section 4(k):
(i) Demand Registrations.
(A) Upon the the written demand of the Purchaser to the Company
specifying the number of Shares to be registered and the intended method
of disposition thereof, the Company will promptly prepare and file, and
will thereafter use its best efforts to cause to be declared effective, a
Registration Statement covering such Shares as promptly thereafter as
possible.
(B) The Company shall enter into such customary agreements
(including an underwriting agreement in customary form) and take all such
other actions as the holders of a majority of the Shares being sold or
the managing underwriter or underwriters retained by holders
participating in an underwritten public offering, if any, reasonably
request in order to expedite or facilitate the disposition of the Shares.
(C) The Company, if requested by the managing underwriter or
underwriters, if any, or by any holder of Shares covered by the
Registration Statement, shall promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters or such holder, as the case may be,
reasonably requests to be included therein, including, without
limitation, information with respect to the number of Shares being sold
by such holder to any underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect
to any other terms of the underwritten offering of the Shares to be sold
in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment.
(D) As promptly as practicable after filing with the Commission
of any document which is incorporated by reference in a Prospectus
contained in a Registration Statement, the Company shall deliver a copy
of such documents to each holder of Shares covered by such Registration
Statement.
(E) On or prior to the date on which the Registration Statement
is declared effective, the Company shall use its best efforts to register
or qualify, and cooperate with the holders of Shares included in such
Registration Statement, the underwriter or underwriters, if any, and
their counsel, in connection with the registration or qualification of
the Shares covered by the Registration Statement for offer and sale under
the securities or blue sky laws of each state and other jurisdiction of
the United States as any such holder or underwriter reasonably requests
in writing, (ii) keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the
period such Registration Statement is required to be kept effective and
(iii) do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions of the Shares covered by
the Registration Statement; provided that the Company will not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not then
so subject.
(F) The Company shall cooperate with the holders of Shares
covered by the Registration Statement and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing Shares
to be sold under the Registration Statement, and enable such Shares to be
in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or such holders may request.
(G) The Company shall use its best efforts to cause the Shares
covered by the registration statement to be registered with or approved
by such governmental agencies or authorities within the United States as
may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of
such securities.
(ii) Piggyback Registrations. If the Company at any time
proposes to effect the registration of shares of its Common Stock other
than in respect of a dividend reinvestment or similar plan or on Form S-4
or S-8 or successor forms thereto, upon the written request of the
Purchaser specifying the number of Shares to be registered, the Company
shall include in such registration all of the Purchaser's Shares so
requested to be included. In furtherance of the Purchaser's piggyback
rights, at any time that the Purchaser has the right to request piggyback
registration, the Company shall provide the Purchaser with ten days prior
written notice of any registration of Common Stock to which such
piggyback rights would apply hereunder.
(iii) Amendments and Supplements. The Company agrees to (i)
prepare and file with the Commission such amendments and post-effective
amendments to any Registration Statement prepared pursuant to this
Section 4(k) as may be necessary to keep such Registration Statement
continuously effective for a period of not less than six months (or such
shorter period which will terminate when all Shares covered by such
Registration Statement have been sold or withdrawn); provided, however,
that each such six-month period shall be extended by a period to time
equal to any period of time that offers and sales of the Shares under the
Registration Statement are prevented by any stop order, injunction or
other action by the Commission or any Notice of Amendment pursuant to
Section 4(e), (ii) cause the related Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act, and (iii) comply with all provisions
of the Act and all provisions of this Section 4, in each instance to the
extent applicable to it with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus.
Section 5. Representations and Warranties of the
Company.
The Company represents and warrants to the Purchaser, on and as of
the Closing Date, as follows:
(a) The Registration Statement in the form in which it becomes
effective and any supplement or amendment thereto when filed with the
Commission will comply in all material respects with the applicable
provisions of the Act and the Rules and Regulations and will not at any
such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that this representation
and warranty does not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any holder of Shares furnished to
the Company by or on behalf of any such holder in writing for use
therein.
(b) All the Shares have been duly authorized and, when issued and
delivered to the Purchaser against payment therefor in accordance with
the terms hereof, will (i) be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and (ii) have
been approved for listing, subject to notice of issuance, on the New York
Stock Exchange.
(c) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with
full power and authority (corporate and other) to own, lease and operate
its properties and to conduct its business as currently conducted.
(d) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, (i)
requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may
be required for the registration of the Shares under the Act and
compliance with the securities laws of various jurisdictions, which will
be effected in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, the Restated Certificate of Incorporation (the "Charter") or
Bylaws or other organizational documents of the Company, or (ii)
conflicts or will conflict with or constitutes or will constitute a
breach of or default under, any agreement, indenture, lease or other
instrument to which the Company is a party or by which it or any of its
property may be bound, or violates or will violate any statute, law,
regulation or filing or any judgment, injunction, order or decree
applicable to the Company or any of its properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to the terms of any agreement
or instrument to which it is a party or by which it may be bound or to
which any of its property or assets is subject.
(e) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and
validly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms.
(f) Neither the Company nor anyone acting on its behalf has
directly or indirectly offered the Shares or any part thereof or any
similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with,
anyone other than the Purchaser. Neither the Company nor anyone acting
on its behalf has taken or will take any action which would subject the
issuance and sale of the Shares to the registration and prospectus
delivery provisions of the Act prior to registration of the Shares as
contemplated hereby.
(g) The Company has not, and nor has anyone acting on its behalf,
employed or engaged any agent, broker or finder or incurred any liability
for any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby.
Section 6. Representations and Warranties of the
Purchaser.
The Purchaser represents and warrants to the Company, on and as of
the Closing Date, as follows:
(a) The Purchaser has been provided an opportunity to obtain such
documents and information concerning the Company, the Shares, the
Purchase Agreement and the transactions contemplated hereby and thereby
as it has deemed appropriate in making its own analysis and financial and
legal evaluation of the Company, the Shares, the Purchase Agreement and
the transactions contemplated hereby and thereby, and the Purchaser
represents and warrants that it has, independently and based on such
documents and information as it has deemed appropriate, made its own
appraisal of the financial condition, business, creditworthiness and
affairs of the Company and of the value and terms of the Shares, this
Agreement and the Purchase Agreement.
(b) The Purchaser represents and warrants that it is acquiring the
Shares for its own account or the account of one or more separate
accounts maintained and controlled by it, for which the Purchaser has
investment discretion with respect to the acquisition of the Shares and
on whose behalf the Purchaser has authority to make this representation,
in each case for investment and not with a view to the distribution
thereof or with any present intention of distributing all or any portion
thereof, all without prejudice to its right at any time, in accordance
with this Agreement, lawfully dispose of all or any part of the Shares.
The Purchaser acknowledges and agrees that the Shares have not been
registered under the Act or any state securities law, or approved by the
Commission or any state agency, and may be resold or otherwise
transferred only if registered pursuant to the provisions of such Act and
applicable state securities law or if an exemption from registration is
available.
(c) The execution and delivery of, and the performance by the
Purchaser of its obligations under, this Agreement have been duly and
validly authorized by the Purchaser, and this Agreement has been duly
executed and delivered by the Purchaser and constitutes the valid and
legally binding agreement of the Purchaser, enforceable against the
Purchaser in accordance with its terms.
(d) The Purchaser represents that it is an "accredited investor"
as such term is defined in Regulation D under the Act, is financially
able to bear the risks of the investment in the Shares and has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks thereof.
(e) The Purchaser has not, and nor has anyone acting on the
Purchaser's behalf, employed or engaged any agent, broker or finder
(other than Fearnley Offshore as provided in the Purchase Agreement) or
incurred any liability for any brokerage fees, commission or finders'
fees (other than to Fearnley Offshore as provided in the Purchase
Agreement) in connection with the transactions contemplated hereby.
(f) The information set forth in the Holder Questionnaire of the
Purchaser is true and complete in all material respects and may be used
by the Company in a Registration Statement until updated or revised by
written notice to the Company by the Purchaser.
Section 7. Indemnification.
(a) In connection with the Registration Statement, the Company
agrees to indemnify and hold harmless each holder of securities covered
thereby, the directors, officers, employees and agents of each holder and
each person who controls any holder within the meaning of the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other Federal or state statutory laws or
regulations, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed
or in any amendment thereof, or in any preliminary Prospectus or
Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, that (i) the
Company will not be liable to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such holder specifically
for inclusion therein and (ii) such indemnity with respect to any
Prospectus shall not inure to the benefit of any holder (or any director,
officer, employee or agent of such holder or any person controlling such
holder) from whom the person asserting any such loss, claim, damage or
liability purchased the Shares if such person did not receive a copy of
the current Prospectus as amended and supplemented and distributed to the
holders by the Company at or prior to the confirmation of the sale of
such Shares, to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of a material
fact contained in the Prospectus was corrected in such current Prospectus
as so amended and supplemented. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each holder of Shares covered by the Registration Statement
severally agrees to indemnify and hold harmless (i) the Company, (ii)
each of its directors, (iii) each of its officers who signs the
Registration Statement and (iv) each person who controls the Company
within the meaning of either the Act or the Exchange Act to the same
extent as the foregoing indemnity from the Company to each holder, but
only with reference to written information relating to such holder
furnished to the Company on or behalf of such holder specifically for
inclusion in the Registration Statement or the Prospectus. This
indemnity agreement will be in addition to any liability which any holder
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise
learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for
which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as
set forth below); provided, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate
counsel at the expense of the indemnifying party, if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it or any other indemnified party which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) above is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (collectively "Losses") to which such indemnified party shall
be subject in such proportion as is appropriate to reflect the relative
fault of such indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Section 7(c),
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution pursuant to
this Section 7(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in this paragraph.
No person guilty of fraudulent misrepresentation shall be entitled to
contribution from any person not guilty thereof.
Section 8. Rule 144.
The Company covenants that it will file the reports required to be
filed by it under the Act, the Exchange Act and the rules and regulations
thereunder or, if the Company is not required to file such reports, it
will, upon the request of any holder of Shares, make publicly available
other information so long as necessary to permit sales under Rule 144
under the Act, and it will take such further action as any holder of
Shares may reasonably request all to the extent required from time to
time to enable such holder to sell Shares without registration under the
Act within the limitation of the exemptions provided by (i) Rule 144
under the Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Shares, the Company will deliver to such holder
a written statement as to whether it has complied with such requirements.
Section 9. Miscellaneous.
(a) This Agreement shall be binding on, and inure to the benefit
of, the parties hereto and their respective successors and permitted
assigns pursuant to Section 3(c)(i) and (d) hereof.
(b) This Agreement may be signed in counterparts, each of which
shall be an original and which taken together shall constitute one
agreement. This Agreement and any modification or waiver hereof may be
executed by facsimile signature.
(c) This Agreement may be modified, waived, discharged or
terminated only by an instrument in writing signed by the Company and
holders of a majority of the Shares (without counting for such purposes
Shares held by the Company or its affiliates).
(d) All notices and other communications hereunder shall be in
writing and shall be served either (i) personally, (ii) by certified
mail, (iii) by overnight courier service, or (iv) by telecopier, in each
case addressed to the party to whom notice is being given at its address
as set forth below or at such other address as may hereafter be
designated in writing by either party hereto. All such notices or other
communications shall be deemed to have been given on (i) the date
received if delivered personally, (ii) five business days after the date
of posting if transmitted by certified mail, (iii) the first business day
after receipt by the overnight courier service, or (iv) the date of
transmission with confirmation answerback if transmitted by telecopier.
Said parties may designate in writing from time to time other and
additional places to which notices may be sent.
All notices to the Company shall be given to it at:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Copy to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Richard S. Mitchell, Esq.
Telephone Number: (212) 530-5000
Telecopy Number: (212) 530-5219
All notices to holders of Shares shall be given at the address set
forth for the Purchaser in the Purchase Agreement, the Purchaser's Holder
Questionnaire or otherwise indicated in writing to the Company by any
such holder.
(e) Damages in the event of breach of this Agreement would be
difficult, if not impossible, to ascertain, and it is therefore agreed
that each party hereto, in addition to and without limiting any other
remedy or right it may have, will have the right to an injunction or
other equitable relief in any court of competent jurisdiction, enjoining
any such breach, and enforcing specifically the terms and provisions
hereof. The existence of this right will not preclude the parties hereto
from pursuing any other rights and remedies at law or in equity which
they may have.
(f) If any provision of this Agreement is held to be illegal,
invalid or unenforceable, and if the rights or obligations of any party
hereto will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part hereof, (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement
a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
(g) The terms and provisions of this Agreement are intended solely
for the benefit of each party hereto and their respective successors and,
in the case of holders of Shares, permitted assigns pursuant to Section
3(c)(i) and (d) hereof, and is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
(h) Except as otherwise expressly provided in this Agreement, each
party will pay its own costs and expenses.
(i) DeepFlex Production Partners L.P. hereby instructs the
Company, at the closing contemplated by the Purchase Agreement, to issue
all of the Shares in the name of DeepFlex Production Systems, Inc., an
affiliate of DeepFlex Production Partners L.P. For purposes of this
Agreement, including but not limited to Sections 4 and 6, the term
"Purchaser" shall include both DeepFlex Production Partners L.P. and
DeepFlex Production Systems, Inc. The Company agrees to cause the Shares
to be registered in the name of DeepFlex Production Systems, Inc., and
Deepflex Production Systems, Inc. hereby agrees to take the Shares at the
closing contemplated by the Purchase Agreement subject to all of the
terms and provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date above first written.
Company:
READING & BATES CORPORATION
By: ____________________________
Name:
Title:
Purchaser:
DEEPFLEX PRODUCTION PARTNERS L.P.
By: DEEPFLEX HOLDINGS L.L.C.
Title: General Partner
By: ___________________________
Name:
Title:
Acknowledged and Agreed:
DEEPFLEX PRODUCTION SYSTEMS, INC.
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT A
HOLDER QUESTIONNAIRE
Holder Questionnaire pursuant to the Common Stock Issuance
Agreement dated as of August 31, 1995 among READING & BATES CORPORATION
and DEEPTECH PRODUCTION PARTNERS, L.P. (the "Agreement"). Each
capitalized term used herein without definition shall have the meaning
ascribed thereto in the Agreement.
Please complete, execute, date and return to:
Reading & Bates Corporation
901 Threadneedle
Suite 200
Houston, TX 77079
Attention: Wayne K. Hillin, Esq.
The information requested below is required for purposes of any
Registration Statement in which any Holder participates, and for purposes
of certain Exchange Act filings. THE UNDERSIGNED HOLDER AGREES TO UPDATE
AND AMEND THIS QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE
INFORMATION CONTAINED HEREIN AND TO PROVIDE ANY ADDITIONAL INFORMATION
REQUESTED BY THE COMPANY PURSUANT TO SECTION 4(e) OF THE AGREEMENT.
Information for notices:
Legal Name of Holder :____________________________
Street Address :___________________________________
Post Office Box:___________________________________
City/State/Zip :___________________________________
Fed. Tax ID. No.(if any):__________________________
Telex Number: _____________
Answerback_______________________
Telecopier Number: _____________
Type of Telecopier: _______________
Contacts: (Please include Back-ups)
1.Name:_________________________________________________
Title:__________________________________________________
Function:_______________________________________________
Business Telephone:_____________________________________
Home Telephone:_________________________________________
2.Name:_________________________________________________
Title:__________________________________________________
Function:_______________________________________________
Business Telephone:_____________________________________
Home Telephone:_________________________________________
Information required for any Registration Statement and
Prospectus pursuant to Item 507 of Regulation S-K under the Securities
Act:
1. Describe the nature of any position, office or other
material relationship (excluding normal banking relationships) which such
Holder has had within the past three years with the Company or any of its
affiliates.
2. Enter below in the space indicated the number of shares
of Common Stock or other securities of Reading & Bates Corporation
convertible into or exchangeable or exercisable for Common Stock owned as
of the date of this certificate (i) by the Holder signing this
certificate for its own account and (ii) in the aggregate by affiliates
(as defined in Exchange Act Rule 12b-2) of such Holder for their own
accounts (excluding, in each case, any Common Stock or other securities
of Reading & Bates Corporation convertible into or exchangeable or
exercisable for Common Stock held by the Holder or its affiliates in
investment accounts, in trust accounts, in custody accounts or in other
similar fiduciary capacities).
Holder Affiliates
________ __________ Shares of Common Stock
________ __________ Other convertible or exchangeable securities
(Specify title of class or series and number
of shares of Common Stock underlying such
securities)
The undersigned Holder hereby represents that the information
contained herein is true and complete in all material respects as of the
date hereof, and agrees to supplement this Holder Questionnaire upon the
request of the Company and to update and amend this Holder Questionnaire
if there is any material change in the information contained herein. The
undersigned Holder hereby authorizes the Company to use the information
contained herein in any registration statement or prospectus filed by the
Company pursuant to the Agreement and to rely upon the information
contained herein, until this Holder Questionnaire is amended or
withdrawn, in executing any certificate, agreement or document
contemplated by the Agreement.
<PAGE>
IN WITNESS WHEREOF the undersigned has duly executed this
document as of the date set forth below.
___________________________________
Name of Holder
By__________________________________
Signature of Authorized Signatory
_______________________________________
Printed Name of Authorized Signatory
_______________________________________
Title
_______________________________________
Date
COMPANY USE ONLY
Date Received_________________________
EXHIBIT 10.3
Dated 8th September 1995
(1) BP EXPLORATION OPERATING COMPANY LIMITED
(2) READING & BATES (CALEDONIA) LIMITED
AGREEMENT
for the sale and purchase of Semi-Submersible
Emergency Support Vessel Iolair
Clause INDEX
1. DEFINITIONS AND INTERPRETATION
2. SALE AND PURCHASE
3. CONSIDERATION
4. COMPLETION
5. PAYMENTS
6. CONDITION OF THE VESSEL; RISK; TITLE
7. REPRESENTATIONS AND WARRANTIES
8. ANNOUNCEMENTS
9. ASSIGNMENT
10. COSTS AND STAMP DUTY
11. CONFIDENTIALITY
12. MISCELLANEOUS
13. CONTRACTS AND APPORTIONMENTS
14. NOTICES
15. GOVERNING LAW AND JURISDICTI0N/ARBITRATION
Schedule
1. THE MORTGAGE
2. THE DEED OF COVENANT
3. THE BILL OF SALE
4. THE PROTOCOL OF DELIVERY AND ACCEPTANCE
5. THE COMPLETION DOCUMENTS
6. THE PARENT COMPANY GUARANTEE
7. THE EQUIPMENT
8. THE EXCLUDED ITEMS
THIS AGREEMENT is made this 8th day of September 1995
BETWEEN:
(1) BP EXPLORATION OPERATING COMPANY LIMITED whose registered
office is at Britannic House, 1 Finsbury Circus, London, EC2M
7BA ("the Seller"); and
(2) READING & BATES (CALEDONIA) LIMITED whose registered
office is at Harman House, 1 George Street, Uxbridge,
Middlesex UB8 1QQ ("the Buyer ").
WHEREAS:
(A) The Seller is the registered owner of the Vessel (as
hereinafter defined);
(B) The Seller wishes to sell and the Buyer wishes to purchase
the Vessel (as hereinafter defined);
(C) The parties hereto wish to set out herein the terms and
conditions upon which the aforesaid sale and purchase shall
take place:
NOW IT IS HEREBY AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, the following expressions shall, except
where the context otherwise requires, have the following
respective meanings:
"Affiliate" means in relation to any Party, any company which
is a subsidiary of such Party or a company of which such Party
is a subsidiary or a company which is another subsidiary of a
company of which such Party is a subsidiary; where
"subsidiary" has the meaning given to it by Section 736 of the
Companies Act 1985;
"Bill of Sale" means a bill of sale in respect of the Vessel
substantially in the form set out in Schedule 3;
"Business Day" means a day on which banks are or, as the
context may require, were generally open for business in
London and Aberdeen, other than a Saturday or Sunday;
"Completion" the fulfillment by the Parties of their
respective obligations pursuant to Clause 4.1;
"Completion Date" means the date and year first above written;
"Completion Documents" means documents substantially in the
form set out in Schedule 5;
"Completion Venue" means the offices of the Seller, Farburn
Industrial Estate, Dyce, Aberdeen AB2 OPB;
"Consideration" means the consideration for the sale of the
Vessel as specified in Clause 3.1;
"Continuing Contracts" means:-
(a) Marine Management Agreement dated 1st January, 1989
between the Seller and Northern Marine Management Limited;
(b) Catering Services Agreement dated 13th September, 1991
between the Seller and Kelvin International Services Limited;
(c) Crane Operator and Ad-Hoc Maintenance Services Agreement
dated 12th August, 1994 between the Seller and Specialist
Maintenance Services Limited; and
(d) Services Agreement between the Seller and Gulf Offshore
N.S. Limited dated 30th September, 1994;
as such agreements may from time to time have been
amended, novated, assigned or novated;
"Deeds of Covenant" means deeds of covenant between inter alia
the Buyer and the Seller in substantially the form contained
in Schedule 2;
"Delivery" means the delivery of the Vessel pursuant to this
Agreement which shall be deemed to have occurred upon delivery
of the Bill of Sale referred to in Clause 4.1 of this
Agreement;
"Equipment" means the Vessel's engines, machinery, boats,
tackle, outfit, spare gear, belongings and appurtenances
whether on board or onshore and shall include the equipment
referred to in Schedule 7 but shall not include the Excluded
Items;
"Excluded Items" means the items to be excluded from the sale
and purchase to be completed hereunder and specified as such
in Schedule 8;
"Mortgages" means mortgages over the Vessel by the Buyer in
favour of inter alia the Seller in substantially the form
contained in Schedule 1;
"Opinion Letters" means opinion letters by Richards, Laden &
Finger PA, 1 Rodney Square, PO Box 551, Wilmington, Delaware,
USA to the Seller in a form reasonably acceptable to the
Seller;
"Owners Data" means all documents, classification, inspection
and other certificates, technical and operating manuals
relating to the Vessel and owned by the Seller including those
held on behalf of the Seller by BP Shipping Limited, WS Atkins
and Lloyds Register (at its Aberdeen and Fenchurch Street,
London offices);
"Parent Company Guarantees" means guarantees by Reading &
Bates Corporation in favour of inter alia the Seller in
substantially the form contained in Schedule 6;
"Party" means the Seller or the Buyer and "Parties" means both
of them;
"Protocol of Delivery and Acceptance" means the protocol of
delivery and acceptance in respect of the Vessel substantially
in the form set out in Schedule 4;
"Reference Interest Rate" means eight per cent (8%) per annum;
"Seller's Account" means Account Number 03099806 at Citibank,
336 Strand, London in the name of "BP Exploration Operating
Company Limited - Operations";
"Time of Delivery and Acceptance" means the time stated in the
Protocol of Delivery and Acceptance;
"the Vessel" means the semi-submersible Emergency Support
Vessel Iolair, registered in Dundee, United Kingdom,
Registered Number 376461 together with the Equipment and the
Owner's Data but excluding the Excluded Item;
"US Dollars" means the lawful currency of the United States of
America;
"Value Added Tax" means Value Added Tax as provided for in the
Value Added Tax Act 1983 and legislation (whether purported
legislation and whether delegated or otherwise) supplemental
thereto or in any primary or subordinate legislation
promulgated by the European Community or any official body or
agency thereof or any tax similar or equivalent to Value Added
Tax imposed by any Country other than the United Kingdom and
any similar or turnover tax replacing or introduced in
addition to any of the same.
1.2 All references to Clauses, Recitals and Schedules are,
unless otherwise expressly stated, references to
clauses of and recitals and schedules to this
Agreement.
1.3 The headings in this Agreement are inserted for
convenience only and shall be ignored in construing
this Agreement.
1.4 Any reference to any statute or statutory instrument
in this Agreement shall be a reference to the same as
amended, supplemented or re-enacted from time to time.
1.5 Unless the context otherwise requires, reference to
the singular shall include the plural and vice versa,
reference to any gender shall include all genders, and
references to persons shall include natural persons,
bodies corporate, unincorporated associations and
partnerships.
2. SALE AND PURCHASE
Subject as herein provided the Seller with full title
guarantee hereby agrees to sell the Vessel to the Buyer for
the Consideration and the Buyer agrees to purchase the Vessel
free from all charters, encumbrances, mortgages and maritime
liens or any other debts or liens whatsoever.
3. CONSIDERATION
3.1 The Consideration payable by the Buyer for the Vessel
shall be Twelve Million Five Hundred Thousand US
Dollars ($12,500,000) to be payable as follows and in
accordance with Clause 4.4:
3.1.1 Two Million Five Hundred Thousand US Dollar
($2,500,000) payable at Completion;
3.1.2 Two Million Five Hundred Thousand US Dollars
($2,500,000) together with interest accrued thereon at
the Reference Interest Rate between the Completion
Date and the date of payment (both dates inclusive)
payable on 6th September 1996;
3.1.3 Seven Million US Dollars ($7,000,000) together with
interest accrued thereon at the Reference Interest
Rate between the Completion Date and the date of
payment (both dates inclusive) payable on 6th
September, 1998;
3.1.4 Five Hundred Thousand US Dollars ($500,000) together
with interest accrued thereon at the Reference
Interest Rate between the Completion Date and the date
of payment (both dates inclusive) payable on 6th
September, 2000:
PROVIDED THAT the Buyer may at its sole discretion elect to
pre-pay the outstanding balance of the Consideration in full
(but not in part) at any time before it becomes due by giving
not less than fourteen days notice in writing to the Seller
and paying the amount of such outstanding balance together
with interest accrued thereon at the Reference Interest Rate
between the Completion Date and the date of payment (both
dates inclusive) in accordance with Clause 4.4.
3.2 The following events shall be deemed to be Events of
Default namely if:-
3.2.1 the Buyer fails to pay when due any sum due and
payable from it to the Seller under this Agreement and
not remedied in five (5)Business Days of notice being
given by the Seller to the Buyer of such failure; or
3.2.2 an order is made or a resolution (whether requiring
confirmation or not) is passed for the winding up of
the Buyer; or
3.2.3 an execution or arrest or diligence or distress is
levied on, sued out upon or enforced against any asset
of the Buyer and is not paid and discharged within
thirty (30) days; or
3.2.4 the Buyer suspends payment of its debts, becomes
unable or admits in writing its inability to pay its
debts, makes a general assignment for the benefit of
or enters into any composition or arrangement of any
kind with its creditors, ceases or threatens to cease
to carry on business or disposes of all or (without
the prior written consent of the Seller) a substantial
part of its assets; or
3.2.5 a receiver, administrator, administrative receiver or
trustee is appointed to the Buyer over all or
substantially all of its assets; or
3.2.6 there occurs any of the events specified in Clauses
3.2.2 to 3.2.5 or any event analogous thereto in
relation to Reading & Bates Corporation; or
3.2.7 the Vessel is lost (whether such loss is an actual or
constructive total loss or a compromise or arranged or
agreed total loss) abandoned, captured, seized,
confiscated compulsorily, acquired or requisitioned
for title; or
3.2.8 the Buyer fails to make a payment of any other
indebtedness when due or any event, act or condition
occurs or exists under any document under which any
such indebtedness is created or evidencing the terms
thereof if the effect thereof is to cause the same to
become due or permit any person to declare the same
due prior to its normal maturity or to create or
crystallise any encumbrance over the whole or any part
of the undertaking, property, assets or revenues of
the Buyer; and on the happening of any such Event of
Default the full amount outstanding under this
agreement together with any interest of the Reference
Interest Rate accrued thereon between the Completion
Date and the date of payment (both dates inclusive)
shall become immediately due upon demand being made by
the Seller.
4. COMPLETION
4.1 Completion of the sale and purchase of the Vessel
shall take place on the Completion Date at the
Completion Venue when:-
(a) the Buyer shall:-
(i) deliver to the Seller a copy, certified as
a true and up to date copy by an officer
of the Buyer, of a resolution of the Board
of Directors of the Buyer evidencing
approval of this Agreement and all
obligations of the Buyer hereunder,
authorising the appropriate representive
to execute and deliver this Agreement, the
Mortgages, the Deeds of Covenant, the
Completion Documents and such other
documentation as shall be necessary in
connection with the transaction
contemplated hereby and to give all
notices and take all other action on
behalf of the Buyer under or for the
purposes of this Agreement;
(ii) deliver to the Seller the Deeds of
Covenant, duly and validly executed;
(iii) deliver to the Seller the Mortgages duly
and validly executed;
(iv) deliver to the Seller the Parent Company
Guarantees and Opinion Letters, duly and
validly executed;
(v) pay that part of the Consideration payable
to the Seller terms of Clause 3.1.1 in
accordance with Clause 4.4;
(b) the Seller shall:-
(i) deliver to the Buyer a certificate signed
by the Company Secretary of the Buyer that
the transaction contemplated in terms of
this Agreement has been duly authorised;
(ii) deliver to the Buyer the Bill of Sale duly
and validly executed;
(iii) table the Completion Documents duly and
validly executed by all parties thereto
other than the Parties;
(iv) deliver interim confirmation of class in
relation to the Vessel issued within
seventy two (72) hours prior to Delivery;
(v) deliver the current certificate of British
Registry of the vessel;
(vi) deliver the Vessel to the Buyer,
(vii) deliver to the Buyer a Power of Attorney
granted by the Seller in favour of certain
of its employees in relation to the
execution of this Agreement and all
documentation to be executed by the Seller
pursuant to the provisions of this
Agreement;
(viii) deliver to the Buyer the United Kingdom
Certificate of Fitness in relation to the
Vessel;
(ix) deliver to the Buyer the International Oil
Pollution Prevention Certificate in
relation to the Vessel.
(c) the Parties shall:-
(i) execute and deliver the Completion
Documents;
(ii) execute and deliver the Protocol of
Delivery and Acceptance.
4.2 Delivery shall be deemed to take place at the Time of
Delivery and Acceptance and, subject to this Clause 4.2,
the Vessel shall be deemed to have been delivered by the
Seller to the Buyer at the location at which she is
situate at the Time of Delivery and Acceptance. Delivery
of all Equipment forming part of the Vessel and all
Owners' Data in each case which is not on board the
Vessel shall be made by the Buyer collecting (at the
Buyer's cost and risk) the same from the premises at
which they are currently held and following Completion
the Buyer shall indemnify the Seller against the costs of
storage of such items in the period following Completion.
4.3 Immediately following Completion the Buyer shall deliver
to the Seller the duly executed Bill of Sale, declaration
of eligibility and a cheque for the recording dues of
such documents at the Registry of Shipping and Seamen, PO
Box 165, Cardiff, CF4 5FU ("the Registry") and the
Seller, acting as the Buyer's agent shall within two (2)
Business Days of the Completion Date procure the delivery
thereof to the Registry.
4.4 Payment of each instalment of the Consideration shall be
properly made and received on the date upon which it
becomes payable in terms of Clause 3.1 or 3.2 on or
before 1 pm London Time in US Dollars for same day value
to the Seller's Account.
4.5 The Parties shall procure that as soon as reasonably
practicable following the Time of Delivery and Acceptance
the volume of unused fuel and lubricating oil kept in
storage tanks and sealed drums on board the Vessel shall
be measured and agreed between the Parties. The Buyer
shall take over the remaining bunkers and unused
lubricating oils in storage tanks and sealed drums at no
cost.
5. PAYMENTS
5.1 (a) All payments to the Seller hereunder shall be
made in full without any set off or counterclaim
whatsoever and free and clear of all deductions
or withholdings except as may be required by law.
Where a requirement to deduct or withhold an
amount from a payment exists in law, the Buyer
shall deliver to the Seller receipts or other
evidence of the amount so deducted or withheld
within thirty (30) days after the payment is made
and will provide all other documentation and
information which is available to it and
appropriate to permit the Seller to substantiate
its claim for recovery of, or credit for, the
amount deducted or withheld.
(b) The Buyer agrees that any failure of or breach by
the Seller of any of their respective
obligations, covenants, representations or
warranties under this Agreement or otherwise in
relation to the Vessel shall not entitle the
Buyer to make any deduction or withholding or set
off or counterclaim against the Consideration
and/or any other sum payable by the Buyer to the
Seller pursuant to this Agreement.
(c) All payments made to the Seller under this
Agreement are calculated without regard to Value
Added Tax. If any such payment constitutes the
whole or any part of the Consideration for a
taxable or deemed taxable supply the amount of
that payment shall be increased by an amount
equal to the amount of Value Added Tax which is
chargeable in respect of the taxable supply in
question.
5.2 In the event of failure by the Buyer to pay to the Seller
any amount payable hereunder on the date on which such
payment is due, the Buyer will pay interest to the Seller
on the unpaid amount from the date of such failure to the
date of actual payment (both before and after judgement)
at the rate of two per cent (2%) per annum above the
Reference Interest Rate.
6. CONDITION OF THE VESSEL: RISK: TITLE
6.1 The Vessel shall be accepted by the Buyer in whatever
condition it is in on the Completion Date.
6.2 The Buyer shall purchase the Vessel "as is where is".
Subject to the provisions of Clause 7 the Buyer
acknowledges and agrees that it is an express and
fundamental term of this Agreement that:
6.2.1 the Seller is not selling the Vessel in the
ordinary course of business and save as expressly
provided herein no condition, representation or
warranty is given by the Seller in relation to
the Vessel and all conditions, representations or
warranties as to fitness, description, suitably,
merchantability, quality, condition, state or
date of manufacture, whether express or implied,
whether statutory or otherwise, together with any
liability for antecedent representation are
hereby expressly excluded (save in the case of
fraud);
6.2.2 any liability of the Seller to the Buyer in tort
in respect of all such matters (save in the case
of fraud) is hereby irrevocably released by the
Buyer save to the extent that such liability
cannot by law be excluded; and
6.2.3 the Vessel has been inspected by the Buyer or its
advisers and the Buyer wishes to purchase the
Vessel notwithstanding the existence of any
latent defect of whatever nature.
6.3 The Seller confirms that at the Completion Date, the
Vessel Management is not aware of any latent defect in
the Vessel. For the purposes of this clause, the term
"Vessel Management" means the Vessel's Onshore Operations
Manager and Offshore Installation Manager.
6.4 Risk and title in the Vessel shall pass to the Buyer at
the Time of Delivery and Acceptance.
7. REPRESENTATIONS AND WARRANTIES
7.1 The Buyer represents and warrants to the Seller that as
at the date hereof:-
(a) the execution, delivery and performance of this
Agreement has been duly authorised by all
necessary or appropriate corporate action on its
part, does not require any shareholder approval
or approval or consent of any trustee or holders
of any indebtedness or any other obligations of
it (except such as have been duly obtained and
are in full force and effect) and does not
contravene any law, governmental rule,
regulation, decree, judgement, injunction or
order binding on it or any of its assets or its
Memorandum and Articles of Association or
contravene the provisions of or constitute a
default under any mortgage, contract, license,
franchise, concession or other agreement to which
it is a party or by which it or any of its assets
is bound or affected; and
(b) this Agreement constitutes legal, valid and
binding obligations of the Buyer and is binding
on the Buyer in accordance with its terms.
7.2 The Seller represents and warrants to the Buyer that as
at the date hereof:-
(a) the execution, delivery and performance of this
Agreement has been duly authorised by all
necessary or appropriate corporate action on its
part, does not require any shareholder approval
or approval or consent of any trustee or holders
of any indebtedness or any other obligations of
it (except such as have been duly obtained and
are in full force and effect) and does not
contravene any law, governmental rule,
regulation, decree, judgement, injunction or
order binding on it or any of its assets or its
Memorandum and Articles of Association or
contravene the provisions of or constitute a
default under any mortgage, contract, license,
franchise, concession or other agreement to which
it is a party or by which it or any of its assets
is bound or affected; and
(b) this Agreement constitutes legal, valid and
binding obligations the Seller and is binding on
the Seller in accordance with its terms.
7.3 Each Party to this Agreement shall pay any tax which may
be lawfully assessed upon that Party by any appropriate
governmental authority in connection with the transaction
hereby envisaged.
8. ANNOUNCEMENTS
Neither the Seller nor the Buyer shall make any announcement
with regard to this Agreement (and each shall procure that its
Affiliates do not make any such announcement) unless prior
thereto it furnishes the other with a copy of such
announcement and obtains the prior written consent of the
other as to such announcement (such consent not to be
unreasonably withheld or delayed) except to the extent
required by any applicable law, or the requirements of any
recognised stock exchange in compliance with its rules and
regulations in which event a copy of the same shall be
furnished to the other as soon as practicable prior to
publication.
9. ASSIGNMENT
Neither Party shall have the right to assign its rights and/or
obligations under this Agreement without the consent of the
other party.
10. COSTS AND STAMP DUTY
10.1 Each of the Parties shall pay its own taxes, fees, costs
and expenses in connection with this Agreement and the
documents executed pursuant hereto. In particular but
without prejudice to that generality any taxes, fees and
expenses in connection with the purchase and registration
of the Buyer's title and/or interest in and to the Vessel
shall be for the Buyer's account and any taxes, fees and
expenses in connection with the registration of the
Mortgages and/or the Deeds of Covenant shall be for the
Seller' s account.
10.2 The Buyer shall pay in a timely manner all and any United
Kingdom stamp duty taxes, charges and other taxes payable
on or in respect of this Agreement and the other
documents executed pursuant hereto.
10.3 The Seller represents and undertakes to the Buyer that
the only broker appointed by it in connection with the
transaction contemplated by this Agreement is Fearnley
Offshore A.S. and the Buyer represents and undertakes to
the Seller that it has not appointed any broker in
connection with the transaction contemplated by this
Agreement
11. CONFIDENTIALITY
Save as provided in Clause 8, the terms of this Agreement
shall be held confidential by the Parties and shall not be
divulged in any way to any third party by one Party without
the prior written approval of the other Party provided that
either Party may, without such approval, disclose such terms
to:-
11.1 any Affiliate of it provided the disclosing Party
procures that such maintains such terms confidential; or
11.2 any outside professional consultants, provided the
disclosing Party obtains a similar undertaking of
confidentiality (but excluding these Clauses 11.1 - 11.6)
from such consultants; or
11.3 any bank or financial institution from whom such Party is
seeking or obtaining finance, provided the disclosing
Party obtains a similar undertaking of confidentiality
(but excluding these Clauses 11.1 - 11.6) from such bank
or institution; or
11.4 the extent required by any applicable laws or the
requirements of any recognised stock exchange in
compliance with its rules and regulations but only after
consultation with the other Party; or
11.5 any Government agency lawfully requesting such terms; or
11.6 any Court of competent jurisdiction acting in pursuance
of its powers.
12. MISCELLANEOUS
12.1 Except insofar as the same is performed on Completion,
this Agreement (including the representations, warranties
and undertakings and agreements contained herein) shall
remain in full force and effect.
12.2 No waiver by either Party of any breach of a provision of
this Agreement shall be binding unless made expressly in
writing. Any such waiver shall relate only to the breach
to which it expressly relates and shall not apply to any
subsequent or other breach.
12.3 The Seller agrees to defend, indemnify and hold harmless
the Buyer and their Affiliates, their agents, directors,
officers and employees and each of them (collectively
"the Buyer's Group") from any and all claims, demands,
actions, damages, losses and expenses, including court
costs and reasonable legal fees for loss, damage or
injury (including death resulting therefrom) to persons
or property, whether in tort or contract, arising out of,
incidental to, or in connection with the operations of
the Vessel at any time prior to the Time of Delivery and
Acceptance, regardless of whether any such claim, demand
or action is asserted before or after such delivery and
regardless of whether the Buyer's Group or any of them,
was or may be alleged to have been negligent, strictly
liable or otherwise legally responsible.
12.4 The Buyer agrees to defend, indemnify and hold harmless
the Seller and their Affiliates, their agents,
directors, officers and employees and each of them
(collectively "the Seller's Group") from any and all
claims, demands, actions, damages, losses and expenses,
including court costs and reasonable legal fees for loss,
damage or injury (including death resulting therefrom) to
persons or property, whether in tort or contract, arising
out of, incidental to, or in connection with the
operations of the Vessel at any time prior to the Time of
Delivery and Acceptance, regardless of whether any such
claim, demand or action is asserted before or after such
delivery and regardless of whether the Sellcr's Group or
any of them, was or may be alleged to have been
negligent, strictly liable or otherwise legally
responsible.
12.5 This Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted
assigns of the Parties.
12.6 This Agreement represents the entire agreement between
the Parties and supersedes all warranties and
representations previously made and all prior
negotiations, proposals, statements of intent,
understandings and agreements relating to the subject
matter hereof.
12.7 The Seller undertakes with the Buyer that for a period of
one hundred (100) days from the Completion Date, it will
procure (at its own cost) that William Kelly. for such
period as he shall remain an employee of the Seller or
any Affiliate of the Seller and (at the sole cost of the
Buyer) the agents of and professional advisers to the
Seller or any Affiliate to the Seller shall provide
whatever information and assistance the Buyer shall from
time to time reasonably require to enable it to own
and/or operate the Vessel and to comprehend and utilize
the Owner's Data and Equipment and to enable the Buyer to
perform its obligations under the Continuing Contracts.
12.8 The Seller shall and shall procure that any Affiliate of
the Seller shall make available any books, documents,
manuals and records belonging to the Seller or such
Affiliate not delivered to the Buyer at Completion which
contain information which should be provided to the Buyer
or which is required for the purpose of owning and/or
operating the Vessel or to enable the Buyer to perform
its obligations under the Continuing Contracts or any tax
or other return in connection thereto for inspection by
representatives of the Buyer during business hours upon
the giving of reasonable advance notice for a period of
six (6) years following Completion.
13. CONTRACTS AND APPORTIONMENTS
13.1 Subject to the provisions of Clause 13.2 the Seller
hereby novates to the Buyer and the Buyer accepts such
novation and shall take over from the Seller at and with
effect from the Completion Date the benefit and burden of
the Continuing Contracts (but only insofar as the
Continuing Contracts shall not have been novated at
Completion in terms of the Completion Documents),
provided that nothing in this Agreement:-
13.1.1 shall require the Buyer to perform any obligation
falling due for performance or which should have
been performed before the Completion Date;
13.1.2 shall make the Buyer liable for any act, neglect,
default or omission in respect of any of the
Continuing Contracts prior to the Completion Date
or for any claim, expense, loss or damage arising
from any failure to obtain the consent or
agreement of any third party to this Agreement or
for any breach of the Continuing Contracts caused
by this Agreement or Completion;
13.1.3 shall impose any obligation on the Buyer for in
respect of any service performed by the Seller
prior to the Completion Date.
13.2 Insofar as any of the Continuing Contracts cannot
effectively be novated to the Buyer without the consent
of a third party therein unless and until such consent is
obtained or such Continuing Contract is novated the
following provisions of this sub-clause shall have
effect:-
13.2.1 the Seller shall use its reasonable endeavours
with the cooperation of the Buyer to procure such
novation or consent;
13.2.2 unless and until such Continuing Contract shall
be novated, the Seller shall hold the same in
trust for the Buyer absolutely and the Buyer
shall (if such sub-contracting is permissible and
lawful under the Continuing Contract) for its own
benefit as agent or sub-contractor for the Seller
(but at the Buyer's expense) perform all the
obligations of the Seller under the relevant
Continuing Contract arising after the Completion
Date;
13.2.3 the Buyer shall indemnify the Seller against all
costs, proceedings, claims, demands and expenses
which may be incurred by the Vendor as a result
of any act, neglect, default or omission on the
part of the Buyer to perform or comply with such
obligations of the Seller under the relevant
Continuing Contract which fall to be performed
after the Completion Date;
13.2.4 the Buyer and the Seller undertake to act or
conduct themselves in such a manner that the
obligations of the Seller under the relevant
Continuing Contract are fully observed and
performed;
13.2.5 notwithstanding any other provision of this sub-
clause the parties hereto shall use all
reasonable endeavours to make such arrangements
as may be appropriate for giving to the Buyer
the benefit of the relevant Continuing Contract
without effecting an actual novation;
13.2.6 unless and until such Continuing Contracts shall
be novated the Seller will (so far as it lawfully
may) at its own cost give all reasonable
assistance to the Buyer to enable the Buyer to
enforce its rights under such Continuing
Contracts.
13.3 The parties undertake to make such arrangements and
institute such procedures as they shall consider
necessary to deal with apportionments, receipts and
liabilities in accordance with the provisions of this
agreement.
13.4 The Seller (to the extent to which the Seller is legally
entitled to assign the same) hereby assigns to the Buyer
all the Seller's rights against third parties (including
but not limited to rights under or in respect of
warranties, representations, guarantees and indemnities)
in respect of the Equipment, the Owners' Data, spares,
fuel and lubricating oil.
13.5 he Seller undertakes that it will (so far as it lawfully
may) give all reasonable assistance to the Buyer to
enable the Buyer to enforce its rights against the third
parties referred to in sub-clause 13.4 above.
14. NOTICES
14.1 Any notices given pursuant to this Agreement shall be in
writing and may be given by hand at, or sent by pre-paid
first class post or facsimile to, the appropriate address
stated in Clause 14.3 (or such other address as may be
given for the purposes of this Agreement by notice in
writing to the other Parties).
14.2 Any such notice given in accordance with 14.1 shall be
deemed to have been given at the time of delivery if
delivered by hand or the first Business Day following the
day of sending it if sent by facsimile or the second
Business Day following the day of sending if sent by pre-
paid first class post.
14.3 The respective addresses for service are:
Seller: BP Exploration Operating Company Limited
Britannic House
1 Finsbury Circus
London EC2M 7BA
Fax: 0171 496 4630
Attention: Manager, Commercial
Buyer: Reading & Bates (Caledonia) Limited
Rotech House
Whitemyres Avenue
Mastrick Industrial Estate
Aberdeen AB2 6HQ
Fax: (O1224) 690355
Attention: Managing Director
15. GOVERNING LAW AND JURISDICTION/ARBITRATION
15.1 This Agreement shall be governed by and construed in
accordance with the laws of England and each of the
Parties hereby submits to the non-exclusive jurisdiction
of the High Court of Justice in London.
15.2 Any dispute arising out this Agreement (other than in
respect of non-payment of the Consideration by the Buyer)
shall be referred to arbitration in London in accordance
with the Arbitration Acts 1950 and 1959 or any statutory
modification or re-enactment thereof for the time being
in force, one arbitrator being appointed by each Party.
On the receipt by one party of the nomination in writing
of the other Party's arbitrator, that Party shall appoint
their arbitrator within fourteen days, failing which the
decision of the single arbitrator appointed shall apply.
If two arbitrators properly appointed shall not agree
they shall appoint an umpire whose decision shall be
final.
IN WITNESS WHEREOF this Agreement has been duly executed on
the day and year first above written.
Signed for and on behalf of
BP EXPLORATION OPERATING COMPANY LIMITED
Signed for and on behalf of
READING & BATES (CALEDONIA) LIMITED
SCHEDULE 8
THE EXCLUDED ITEMS
ITEMS OWNED BY STOLT COMEX SEAWAY LIMITED
1. Hyperbaric Rescue Lifeboat
2. Hyperbaric Rescue Lifeboat Trunk
3. Hyperbaric Rescue Lifeboat Wooden Cradle
4. Two umbilical winches
5. Three tugger winches
6. Nine excursion umbilicals
7. Loose gear in store
8. Sample gas and bottles in LSU room
9. Heliphone at sat dive station
ITEMS OWNED BY IOLAIR WELFARE COMMITTEE
1. Three gaining machines
2. Polar pulse unit
3. Two double cassette units and headphones
4. 301 audio tapes
5. 755 video tapes
6. 144 TV sets
7. one monitor
8. TV set in television lounge
9. Phone lounge unit
10. Approximately 140 video cassette records
11. Various items of gym equipment
12. 16 cassette and CD portable units
13. One nintendo unit
14. Secure box and money counting trays
15. Reference library with 47 books
MISCELLANEOUS THIRD PARTY EQUIPMENT CURRENTLY ON HIRE
1. Citadel oxygen quad
2. Soft drinks chiller/dispenser
3. Medical gases in bottles
4. All skips, compactors and containers
5. AVC video films
6. 250 kg water bag test equipment
ITEMS OWNED BY GRANDA
Refer to attached list
ITEMS OWNED BY MET OFFICE
List of Granada Registered Equipment on Iolair
Equipment Location Identification
MAPS PC Computer VDU - Compaq Heli-Admin Office UKAB 17865
MAPS PC Computer with kb and wedge - Compaq Heli-Admin Office UDAB 17868
MAPS Printer (LA21U) Heli-Admin Umce UKAB 17788
IBM Computer - Base unit, mouse and keyboard Heli-Admin Office UKAB 40613
IBM VDU for above Heli-Admin Office UKAB 40605
IBM Computer - Base Unit, mouse and keyboard OCCs Office UKAB 40611
IBM VDU for above OCCs Office UKAB 40596
IBM Computer - Base Unit, mouse and keyboard AMEC Office UKAB 40636
IBM VDU for above AMEC Office UKAB 40599
IBM Computer - Base unit, mouse and keyboard OIM Office UKAB 40634
IBM VDU for above OIM Office UKAB 40595
DELL 316SX Computer - Base unit, mouse and k.b. UNITY OIMs Office UKAB 13423
DELL VGA Colour-plus Monitor UNITY OIMs Office UKAB 13424
Compaq Computer-Base unit, mouse and keyboard D trunk UKAB 17858
Compaq VDU D trunk UKAB 17859
Compaq Computer-Base unit, mouse and keyboard Construction Co-ord UKAB 17870
Compaq VDU Construction Co-ord UKAB 17863
Compaq Computer-Base unit, mouse and keyboard Construction Co-ord UKAB 17852
Compaq VDU Construction Co-ord UKAB 17860
Compaq Computer-Base unit, mouse and keyboard PLOT Office UKAB 17869
Compaq VDU PLOT Office UKAB 17864
Printer - Hewlett-Packard Deskjet 520 General Office UKAB 40931
Printer - Hewlett Packard 2277A Deskjet Plus OCC Office UKAB 05126
Plotter - Hewlett Packardd 7550A D Trunk UKAB 17777
Printer - Fujitsu DL5600 Dot Matrix Certification Eng UKAB 17772
Office
EXHIBIT 10.4
Department of Transport FORM ROS 25 1/94
Merchant Shipping (Registration, etc.) Act 1993
MORTGAGE OF A SHIP
to secure Account Current etc./other obligation
- If more than one mortgagor then a separate mortgage is required from
each mortgagor, unless shares are jointly held.
- In respect of fishing vessels, mortgages may be registered only against
those registered with FULL registration.
- The prompt registration of a mortgage deed with the Registry is
essential to establish the priority of the mortgage. This is because
the priority of the mortgage is determined by the date on which it is
produced for registration and not from the date of the mortgage itself.
- If the mortgagor is a company, the mortgage must also be registered
with the Registrar of Companies within 21 days of its execution.
- It is important that the Registry is informed of any changes.
- Please write in black ink using BLOCK CAPITALS, and tick boxes where
appropriate.
The mortgage reference No. (issued by the mortgagee) is:
SECTION 1: DETAILS OF THE SHIP
IS THIS MORTGAGE IN RESPECT OF A FISHING VESSELS? Yes [ ] No [x]
NAME OF SHIP IOLAIR
OFFICIAL NUMBER 376461
SECTION 2: THE MORTGAGE
Whereas there is 1. An account current
between 2. Reading & Bates (Caledonia) Limited having its registered
office at Harman House, 1 George Street, Uxbridge, Middlesex
UB8 1QQ
(hereinafter called "the mortgagor")
and 2. BP Exploration Operating Company Limited having its
registered office at Britannic House, 1 Finsbury Circus,
London EC2M 7BA
(hereinafter called "the mortgagee")
3. and such account current is regulated by a Deed of
Covenant bearing even date with this Mortgage and
supplemental hereto (hereinafter as the same may be from
time to time amended called the "Deed of Covenant") made
between the Mortgagor (1) and the Mortgagee (2) and the
Mortgagor has agreed to execute this Mortgage in favour
of the Mortgagee for the purpose of securing payment to
the Mortgagee of all sums for the time being and from
time to time owing to the Mortgagee (including loans,
interest, commission and all other liabilities) in the
manner and at the time set forth in the Deed of Covenant
and the amount of principal, interest and other sums due
at any given time can be ascertained by reference to the
Deed of Covenant and the books of account (or other
accounting records of the Mortgagee).
SECTION 2: THE MORTGAGE (continued)
- Complete in respect of "account current":
Now we the mortgagor(s) in consideration of the advance made or to
be made to us by the mortgagee bind ourselves to pay to the
mortgagee the sums for the time being due on this security whether
by way of principal interest or otherwise at the time(s) and in the
manner mentioned above.
For the purpose of better securing to the mortgagee(s) the sum mentioned
above, we hereby mortgage to the mortgagee 64/64ths (sixty four sixty
fourths) shares of which we are the owners in the ship described above and
in its appurtenances.
Lastly, we for ourselves, hereby declare that we have the power to
mortgage in the manner aforesaid the above-mentioned shares and that they
are free from encumbrances.
COMPLETE IF THE MORTGAGOR IS A COMPANY
Executed by the mortgagor as a deed on this 8th day of September 1995
by: signing by the following persons;
Authorized Signatory A. Bakonyi
EXHIBIT 10.5
Department of Transport FORM ROS 25 1/94
Merchant Shipping (Registration, etc.) Act 1993
MORTGAGE OF A SHIP
to secure Account Current etc./other obligation
- If more than one mortgagor then a separate mortgage is required from
each mortgagor, unless shares are jointly held.
- In respect of fishing vessels, mortgages may be registered only against
those registered with FULL registration.
- The prompt registration of a mortgage deed with the Registry is
essential to establish the priority of the mortgage. This is because
the priority of the mortgage is determined by the date on which it is
produced for registration and not from the date of the mortgage itself.
- If the mortgagor is a company, the mortgage must also be registered
with the Registrar of Companies within 21 days of its execution.
- It is important that the Registry is informed of any changes.
- Please write in black ink using BLOCK CAPITALS, and tick boxes where
appropriate.
The mortgage reference No. (issued by the mortgagee) is:
SECTION 1: DETAILS OF THE SHIP
IS THIS MORTGAGE IN RESPECT OF A FISHING VESSELS? Yes [ ] No [x]
NAME OF SHIP IOLAIR
OFFICIAL NUMBER 376461
SECTION 2: THE MORTGAGE
Whereas there is 1. An account current
between 2. Reading & Bates (Caledonia) Limited having its registered
office at Harman House, 1 George Street, Uxbridge, Middlesex
UB8 1QQ
(hereinafter called "the mortgagor")
and 2. Britoil plc, Burnside Road, Farburn Industrial Estate, Dyce,
Aberdeen AB2 OPB
(hereinafter called "the mortgagee")
3. and such account current is regulated by a Deed of
Covenant bearing even date with this Mortgage and
supplemental hereto (hereinafter as the same may be from
time to time amended called the "Deed of Covenant") made
between the Mortgagor (1) and the Mortgagee (2) and the
Mortgagor has agreed to execute this Mortgage in favour
of the Mortgagee for the purpose of securing payment to
the Mortgagee of all sums for the time being and from
time to time owing to the Mortgagee (including loans,
interest, commission and all other liabilities) in the
manner and at the time set forth in the Deed of Covenant
and the amount of principal, interest and other sums due
at any given time can be ascertained by reference to the
Deed of Covenant and the books of account (or other
accounting records of the Mortgagee).
SECTION 2: THE MORTGAGE (continued)
- Complete in respect of "account current":
Now we the mortgagor(s) in consideration of the advance made or to
be made to us by the mortgagee bind ourselves to pay to the
mortgagee the sums for the time being due on this security whether
by way of principal interest or otherwise at the time(s) and in the
manner mentioned above.
For the purpose of better securing to the mortgagee(s) the sum mentioned
above, we hereby mortgage to the mortgagee 64/64ths (sixty four sixty
fourths) shares of which we are the owners in the ship described above and
in its appurtenances.
Lastly, we for ourselves, hereby declare that we have the power to
mortgage in the manner aforesaid the above-mentioned shares and that they
are free from encumbrances.
COMPLETE IF THE MORTGAGOR IS A COMPANY
Executed by the mortgagor as a deed on this 8th day of September 1995
by: signing by the following persons;
Authorized Signatory A. Bakonyi
EXHIBIT 10.6
DATED 8th September 1995
READING & BATES (CALEDONIA) LIMITED (1)
BP EXPLORATION OPERATING COMPANY LIMITED (2)
DEED OF COVENANT
===========================================================================
THIS DEED OF COVENANT is made the 8th day of September 1995
BETWEEN:
(1) READING & BATES (CALEDONIA) LIMITED, registered in England (No.
1591065) whose registered office is at Harman House, 1 George
Street, Uxbridge, Middlesex UB8 1QQ ("the Owner" which expression
shall include its successors and permitted assigns); and
(2) BP EXPLORATION OPERATING COMPANY LIMITED, whose registered office is
situate at Britannic House, 1 Finsbury Circus, London EC2M 7BA ("the
Mortgagee" which expression shall include its successors and
permitted assigns.
WHEREAS:
(A) The Owner is the absolute sole legal and beneficial owner of the
Vessel free from all mortgages, liens, charges and incumbrances
whatever (other than the Britoil Mortgage).
(B) The Owner and the Mortgagee have entered into the Sale and Purchase
Agreement for the sale and purchase of the Vessel in terms of which
certain sums remain outstanding by the Owner to the Mortgagee;
(C) This deed is supplemental to a first priority mortgage over the
Vessel and of even date with this deed ("the Mortgage").
NOW THIS DEED WITNESSETH as follows:
1. DEFINITIONS
1.1 In this agreement the words and phrases set out below shall have the
meanings ascribed to them:
"Approved Brokers" means insurance brokers appointed by the
Owner from time to time and approved by the
Mortgagee (such approval not to be
unreasonably withheld or delayed);
"Britoil" means Britoil plc (Company number 77750);
"Britoil Mortgage" means the statutory mortgage over all sixty
four sixty fourth (64/64th) shares of the
Vessel and the deed of covenant both dated
of even date herewith between the Owner and
Britoil;
"Business Day" means any day on which banks in the City of
London are normally open for business (other
than Saturday);
"Default Rate of
Interest" means the Reference Interest Rate (as
defined in the Sale and Purchase Agreement)
plus Two (2) percentage points;
"Excess Risks" means the proportion of claims for general
average and salvage charges and under the
ordinary running down clause not recoverable
in consequence with the value at which a
Vessel is assessed for the purpose of such
claims exceeding her insured value;
"Event of Default" means any event specified in Clause 6 of
this Agreement;
"Indebtedness" means all monies and/or liabilities of
whatsoever nature referred to in Clause 2 of
this deed whensoever and howsoever arising
from time to time;
"the Mortgage" means a first priority/statutory mortgage
over all sixty four sixty fourth (64/64th)
shares of the Vessel dated of even date
herewith mentioned in recital (C);
"Mortgaged Property" includes:-
(a) all sixty four sixty fourth (64/64th)
shares of the Vessel;
(b) Owner's Insurances and all benefits
thereof (including claims of
whatsoever nature and return of
premiums);
(c) Requisition Compensation
"Owner's Insurances" includes all policies and contracts of
insurance (which expression includes all
entries of the Vessel in a protection and
indemnity or War Risks association) which
are from time to time during the Security
Period taken out or entered into by the
Owner in respect of the Vessel or otherwise
in connection with the Vessel and shall
include (without limitation) the benefits of
claims of whatever nature and return of
premiums;
"Protection and
Indemnity Risks" means the usual risks covered by an English
or Norwegian protection and indemnity
association including the proportion not
recoverable in case of a collision and the
ordinary running down clause;
"Reading & Bates
Corporation" means Reading & Bates Corporation a company
incorporated under the laws of Delaware and
having its principal place of business at
901 Threadneedle, Suite 200, Houston, Texas
77079-2902, United States of America;
"Receiver" means a receiver appointed pursuant to the
provisions of Clause 9 of this Deed;
"Required Insurance" means any insurance or entry referred to in
Clause 4.1. of this Agreement;
"Requisition Compensation" means all monies or other compensation
payable during the Security Period by reason
of requisition for title or other compulsory
acquisition of the Vessel otherwise than by
requisition for use or hire not involving
requisition of title;
"The Sale and Purchase
Agreement" means a sale and purchase agreement dated of
even date herewith between the Owner and the
Mortgagee in respect of the sale and
purchase of the Vessel;
"Security Period" means the period commencing on the date
hereof and terminating upon whichever shall
be the later of:
(i) the date upon which all monies payable
to the Mortgagee under the Sale and
Purchase Agreement shall have been
paid to the Mortgagee; or
(ii) the date upon which all monies payable
to the Mortgagee under this Deed shall
have been paid to the Mortgagee;
"Total Loss" means:-
(a) actual or constructive or compromised
or arranged total loss of the Vessel;
or
(b) requisition for title or other
compulsory acquisitions of the Vessel
other than by requisition for use or
hire not involving requisition of
title;
"The Vessel" means the semi-submersible emergency support
vessel Iolair registered in Dundee, United
Kingdom, registered number 376461 and
includes any share or interest therein and
her engines, machinery, boats, tackle,
outfit, spare gear, fuel or other stores,
belongings and appurtenances whether on
board or ashore;
"War Risks" includes the risk of mines and all risks
excluded from the standard form of English
or Norwegian marine policy by the "free of
capture and seizure" clause;
2. COVENANT OF THE OWNER
The Owner covenants and agrees with the Mortgagee:-
2.1 to pay to the Mortgagee all sums becoming payable by the Owner
to the Mortgagee in terms of the Sale and Purchase Agreement;
2.2 to pay to the Mortgagee all sums becoming payable in terms of
this deed.
3. CHARGE OF VESSEL
By way of security for payment of the sums and performance of the
other obligations referred to in Clause 2 the Owner mortgages and
charges to and in favour of the Mortgagee with full title guarantee
all its interest present and future in the Mortgaged Property (and
the Owner warrants the Vessel to be free at the date of this deed
from any other charge or incumbrance whatever other than the Britoil
Mortgage) and without prejudice to the generality of the foregoing
the Owner assigns and agrees to assign to the Mortgagee all policies
of insurance that have been or may be taken out in respect of the
Vessel and all the benefits of such policies including (without
limitation) claims of whatever nature and return of premiums.
4. COVENANTS BY OWNER
The Owner further covenants with the Mortgagee that during the
Security Period:-
4.1 it will insure at the Owner's cost, the Vessel:-
4.1.1 in the joint names of the Owner and the Mortgagee (but
without liability on the part of the Mortgagee for
premiums or calls) against all marine risks which are
from time to time insurable (including War Risks and
kindred perils and Excess Risks) on an agreed value
basis for not less than whichever is the greater of
current market value or 110% of all sums payable to the
Mortgagee under the Sale and Purchase Agreement. All
policies taken out and entries made in compliance with
the Owner's obligations under this Clause shall bear a
loss payable clause in the terms set out in Schedule 2
to this deed or in such other terms as the Mortgagee may
reasonably approve in writing; and
4.1.2 in the joint names of the Owner and the Mortgagee (but
without any liability on the part of the Mortgagee for
premiums and calls) and such other names as shall from
time to time be approved in writing by the Mortgagee for
the full value and tonnage of the Vessel against
Protection and Indemnity Risks (including but not
limited to the proportion not recoverable in case of
collision under the ordinary running down clause) and
claims of employees, servants, agents or sub contractors
of the Owner, any charterer of the Vessel, passengers,
or third parties and their respective defendants, and
against such other risks as may be required by statute,
order or regulation of the United Kingdom and of all
other countries to whose jurisdiction the Vessel may
from time to time become subject or of which the
Mortgagee may reasonably direct. All policies taken out
and entries made in compliance with the Owner's
obligations under this clause shall bear a loss payable
clause in their terms set out in Schedule 2 to this deed
or in such other terms as the Mortgagee may reasonably
approve in writing.
4.2 each policy or entry taken out or effected in compliance with
the terms of clause 4.1 above shall be effected through such
brokers and with such insurance companies, underwriters or War
Risks or protection and indemnity associations as the
Mortgagee may reasonably approve and shall be in such form and
upon such terms as the Mortgagee shall from time to time
reasonably approve in writing. The Owner shall forthwith give
or cause the Approved Brokers to give notice of the assignment
of the Owner's Insurances in the form set out in Schedule 1 to
this deed or in such other form as the Mortgagee may require
to all insurers, underwriters, clubs and associations
providing insurance in connection with the Vessel and similar
notice shall be given from time to time to any further
insurers, underwriters, clubs and associations providing
insurance in connection with the Vessel.
4.3 it will punctually pay all such premiums, calls,
contributions or other sums as may be required in order to
insure and enter the Vessel in accordance with the terms of
this deed, and to keep the vessel so insured and entered, and
it will produce to the Mortgagee the receipts (or other
evidence of payment) for such premiums, calls, contributions
or other sums within 14 days of such payment. The owner shall
not take credit in respect of the payment of premiums or calls
or contributions without the prior approval of the Mortgagee
and the Owner shall procure that the Approved Brokers and any
insurance companies or underwriters with which the Vessel is
insured and any protection and indemnity association and/or
war risk association in which the Vessel is entered shall
waive any lien for premiums or calls except in relation to
premiums or calls attributable to the Vessel.
4.4 it will renew all Required Insurances at least fourteen (14)
days before the relevant policies or contracts expire and
procure that the Approved Brokers shall promptly confirm in
writing to the Mortgagee as and when each such renewal is
effected;
4.5 it will arrange for the execution of such guarantees as may
from time to time be required by any protection and indemnity
or War Risks association;
4.6 it will procure that the interest of the Mortgagee as
mortgagee of the Vessel and assignee of the Required Insurance
is duly indorsed or noted on all slips, cover, notes,
policies, certificates of entry or other instruments of
insurance issued in connection with any Owners Insurances;
4.7 it will procure that all slips, cover notes, policies,
certificates of entry or other instruments of insurance
relating to a Required Insurance shall be deposited with the
Approved Brokers and that the Approved Brokers shall if at any
time reasonably required, allow representatives of the
Mortgagee access during normal office hours and upon the
giving of reasonable notice to inspect such slip, cover note,
policy, certification of entry or other instrument of
insurance to the Mortgagee;
4.8 it will procure that the Approved Brokers and any associations
or clubs through whom the Required Insurance are placed
furnish the Mortgagee a letter or letters of undertaking in
such form as may be reasonably required by the Mortgagee;
4.9 it will deliver to the Mortgagee duplicates or certified
copies of all policies relating to the Required Insurances and
it will assign to the Mortgagee all sums insured by or to
become payable under such policies or any of them and the full
benefit of them and do all such things and execute all such
documents as shall create legal title in such policies or the
proceeds of them in the Mortgagee;
4.10 it will not (without the prior written consent of the
Mortgagee such consent not to be unreasonably withheld or
delayed) alter any Required Insurance nor do anything nor
suffer anything to be done whereby any Required Insurance on
the Vessel or any cover afforded by the rules of any mutual
association in which the Vessel is entered may be or become
void or unenforceable or whereby any sum paid out under any
Required Insurance may be or become payable;
4.11 it will keep the Vessel registered as a British Vessel at the
port of registry in a United Kingdom (without the prior
written consent of the Mortgagee which consent may be refused
by the Mortgagee at its sole discretion or granted subject to
conditions) and not do or suffer to be done anything whereby
such registration may be forfeited or imperilied;
4.12 it will not employ or permit the Vessel to be employed in any
illicit trade or in carrying any illicit or prohibited goods;
4.13 it will not without the prior written consent of the Mortgagee
(and then only subject to such terms as the Mortgagee may
impose) (and save as permitted under the Services Agreements)
let or employ the Vessel:
4.13.1 on demise charter for any period; or
4.13.2 on any charterparty contract of affreightment or
other contract of employment for a period which
exceeds, or which by virtue of any optional
extensions may exceed, 6 months; or
4.13.3 below the market rate prevailing when the Vessel
is fixed for such letting or employment.
4.14 it will maintain the Vessel in a good and efficient state or
repair so to maintain her present class namely +OU100A and
keep her at all times in thoroughly good and seaworthy repair
and good order and decorative condition so as to make her
comply with all regulations and requirements of the laws of
government of the United Kingdom and of any country where the
Vessel may at any time be and renew and replace to the
reasonable satisfaction of the Mortgagee all parts and
equipment as and when they may become worn out, damaged, or
lost with parts and equipment of a similar nature (as regards
workmanship and quality of materials) and of at least equal
value;
4.15 it will permit the Mortgagee to inspect the condition of the
Vessel at all reasonable times and upon reasonable prior
notice and with the prior consent of any charterer and give
the Mortgagee sufficient notice whenever practicable of
surveys and major repairs so as to enable the Mortgagee's
surveyors to attend them and if on making such inspection the
Mortgagee shall discover any defect the Mortgagee may call
upon the owner to restore and make good and repair the same
and if any defect or defects are not repaired, restored and
made good to the satisfaction of the Mortgagee having notified
the Owner thereof and after a reasonable period (which shall
not exceed in any event a period of 30 days from the date of
such notification by the Mortgagee) the Mortgagee shall be at
liberty at the expense of the Owner to repair, restore and
make good such defect or defects or to engage others to do the
work and debit all sums so expended by the Mortgagee to the
account of the Owner.
4.16 it will notify the Mortgagee forthwith by letter or in the
case or urgency by telegram or telex:-
4.16.1 of any accident or damage to the Vessel involving
repairs the cost of which is likely to exceed
L250,000 (or the equivalent in any other
currency);
4.16.2 of any occurrence whereby the Vessel has or is
likely to become a Total Loss;
4.16.3 of any actual or threatened arrest, detention,
seizure, confiscation or requisition for title or
use of the Vessel;
4.16.4 of any requirement of insurers or any competent
authority which is not immediately carried out;
and
4.16.5 of the happening of any Event of Default;
4.17 in the event of any requisition for title or use or seizure of
the Vessel by any authority it will take all such steps and
execute all such documents at its own expense as may be
reasonably requested by the Mortgagee to ensure the
Mortgagee's security interest in any payment or compensation
in respect of such requisitioning or seizure;
4.18 it will permit the Mortgagee to exercise all rights and
remedies given to it by this deed by the Mortgage by law and
otherwise and pay to the Mortgagee within 7 days of demand
being made all sums whatever which the Mortgagee may pay or
become liable to pay (including legal costs on a full
indemnity basis) in connection with the protection maintenance
and enforcement of the security created by this deed and by
the Mortgage or the exercise of any of the aforesaid rights
and remedies;
4.19 it will not without the prior written consent of the Mortgagee
(which consent shall not be unreasonably withheld or delayed)
make any modifications or alterations to the speed or
structure of the Vessel or the machinery or equipment of the
Vessel that are not required for the performance of the
Owners obligations hereunder or under the Services Agreements
(as defined in the Britoil Mortgage);
4.20 it will submit the Vessel regularly to such periodical or
other surveys as may be required for classification purposes
and if so required to supply to the Mortgagee copies of all
survey reports issued in respect thereof;
4.21 it will pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens on or claims enforceable against the Vessel
and in any event of arrest of the Vessel pursuant to legal
process or in the event of her detention in exercise or
purported exercise of any such lien as aforesaid to procure
the release of such Vessel from such arrest or detention
forthwith upon receiving notice thereof by providing bail or
otherwise as the circumstances may require;
4.22 it will promptly furnish the Mortgagee with all such
information as it may from time to time require and which is
not confidential regarding the Vessel and her employment
position and engagements, particulars of all towages and
salvages and copies of all charters and other contracts where
her employment or otherwise howsoever concerning her;
4.23 it will promptly pay all tolls, dues and other outgoings
whatsoever in respect of the Vessel and keep proper books of
account in respect of the Vessel and as and when the Mortgagee
may reasonably so require make such books available for
inspection on behalf of the Mortgagee and it will furnish
satisfactory evidence that the wages and allotments and the
insurance and pension contributions of the Master and crew are
being regularly paid and that all deductions from the crews
wages in respect of all applicable tax liabilities are being
properly accounted for and that the Master has no claim for
disbursements other than those incurred by him in the ordinary
course of trading on the voyage progress;
4.24 it will not (save as envisaged by this Deed) mortgage, charge,
sell, assign, abandon or otherwise encumber or assign the
Vessel or offer the creation of any such mortgage, charge or
assignment as aforesaid to or in favour of any person other
than the Mortgagee without the prior written consent of the
Mortgagee and/or Britoil, the giving or refusal of such
consent to be in the absolute discretion of the Mortgagee and
the Mortgagee may give any such consent upon such terms as it
may deem fit;
4.25 it will not without the previous consent in writing of the
Mortgagee put the Vessel into the possession of any person for
the purpose of work being done upon her in an amount exceeding
or likely to exceed two hundred and fifty thousand pounds
(L250,000) (or the equivalent in any other currency) unless
such person shall first have given to the Mortgagee in terms
satisfactory to it a written undertaking not to exercise any
lien on the Vessel for the cost of such work or otherwise;
4.26 it will pay to the Mortgagee within Thirty (30) days of a
demand therefor all monies whatsoever which the Mortgagee
shall or may reasonably and properly expend, be put to or
become liable for in or about the protection, maintenance or
enforcement of the security created by this deed or the
Mortgage or in or about the exercise by the Mortgagee of any
of the powers vested in it hereunder or thereunder and to pay
interest thereon at the Default Rate of Interest insofar
as such monies have not been paid within the said period of
thirty (30) days from the date whereon such expense or
liability was due to the Mortgagee to the date of payment as
well before as after judgement;
5. PROTECTION OF SECURITY
The Mortgagee shall (without prejudice to any other rights or powers
to which it may be entitled) be entitled but not bound at all times
to take any such action it may think for the purpose of protecting
the security created by this deed and by the Mortgage and in
particular (but without prejudice to the generality of the
foregoing) if the Owner shall at any time fail to make any payment
(other than a payment due to the Mortgagee) or do any thing required
to be made or done which is an Event of Default or which would with
the passing of time or on the giving of notice constitute an Event
of Default by the terms of this deed the Mortgagee may make such
payment or do such thing itself and the Owner shall on demand pay to
the Mortgagee an amount equal to such payment or the costs or
expenses incurred by the Mortgagee in doing such thing and the
amount paid together with interest on it shall be added to the
amount secured by this deed and by the Mortgagee. The exercise by
the Mortgagee of its rights under this clause 5 shall not affect its
right to treat the failure of the Owner to make such payment or do
such thing as an Event of Default pursuant to Clause 6.
6. EVENTS OF DEFAULT
The following events shall be deemed to be Events of Default
namely:-
6.1 the Owner fails to pay when due any sum payable by the Owner
to the Mortgagee in respect of the Indebtedness within five
(5) Business Days of such due date at the place and in the
manner expressed to be payable; or
6.2 the Owner fails to perform and observe any of the covenants
conditions, agreements and stipulations on its part contained
in this deed and such failure, if capable of remedy, continues
unremedied (in the case of a material obligation of the Owner
under this Deed) for fourteen (14) days and (in the case of
any other obligations hereunder) for thirty (30) days, after
the Mortgagee has requested in writing the same to be
remedied; or
6.3 notice is given to the Mortgagee that any Required Insurance
is to be altered, amended or cancelled or has not been renewed
at least fourteen (14) days prior to its renewal date and the
Owner does not within (10) days of the date of such notice
effect an alternative Required Insurance reasonably
satisfactory to the Mortgagee or renew the existing Required
Insurance; or
6.4 an order is made or a resolution (whether requiring
confirmation or not) is passed for the winding up of the
Owner; or
6.5 an execution or arrest or diligence or distress is levied on,
sued out upon or enforced against any of the assets of the
Owner and is not paid and discharged within thirty (30) days;
or
6.6 the Owner suspends payment of its debts, becomes unable or
admits in writing its inability to pay its debts, makes a
general assignment for the benefit of or enters into any
composition or arrangement of any kind with its creditors,
ceases or threatens to cease to carry on business or disposes
of all or (without the prior written consent of the Mortgagee)
a substantial part of its assets; or
6.7 a receiver, administrator, administrative receiver or trustee
is appointed in respect of the Owner or over all or
substantially all of its assets; or
6.8 there occurs any of the events specified in Clauses 6.4 - 6.7
or any event analogous thereto in relation to Reading & Bates
Corporation; or
6.9 the Vessel is lost (whether such loss is an actual or
constructive total loss or a compromised or arranged or agreed
total loss) abandoned captured, seized, confiscated
compulsorily, acquired or requisitioned for title;
6.10 the Owner fails to make a payment of any other indebtedness
when due or any event, act or condition occurs or exists under
any document under which any such indebtedness is created or
evidencing the terms thereof if the effect thereof is to cause
the same to become due or permit any person to declare the
same due prior to its normal maturity or to create or
crystallise any encumbrance over the whole or any part of the
undertaking, property, assets or revenues of the Owner.
and on the happening of any such Event of Default the full amount
secured by this deed shall become immediately due and payable upon
demand being made and the Mortgagee shall be entitled but shall not
be obliged to immediately put into force and to exercise all the
powers possessed by it as mortgagee and chargee of the Vessel and
other property charged by this deed and (without prejudice to the
generality of the foregoing) to put into force and to exercise all
or any of the powers conferred on the Mortgagee under Clauses 7 and
8.
7. MORTGAGEES' REMEDIES
Time shall be considered as of the essence in relation to the
payment of any sums or performance of any obligation referred to in
clause 2 of this Deed and the performance of any other obligation
undertaken by the Owner in terms of this Deed and on the happening
of any Event of Default the Mortgagee shall be entitled as and when
it shall think fit with or without notice or further demand to put
into force and exercise all the powers and remedies possessed by it
according to law as mortgagee and chargee of the Vessel and other
property charged by this deed and in particular:
7.1 to take possession of the Vessel;
7.2 to collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under any
policy or contract of insurance (which expression shall
include all entries in a War Risks or protection and indemnity
association) relating to the Vessel and to take over or
institute all such proceedings in connection with such
insurance as the Mortgagee in its absolute discretion thinks
fit and to permit the brokers through whom collection or
recovery is effected to charge and retain the usual brokerage
therefor;
7.3 to discharge, compound, release or compromise claims in
respect of the Vessel which have given or may rise to any
charge or lien on the Vessel in priority to the Mortgagee or
which are or may be enforceable by proceedings against the
Vessel;
7.4 to sell the Vessel or any share in her by public auction or
private contract at any place in the world for cash or credit
and otherwise upon such terms as the Mortgagee in its absolute
discretion may determine with power to postpone any such sale
and without being answerable for any loss occasioned by such
sale or resulting from postponement thereof and at any such
public sale to become the purchaser and set off the purchase
price against any sums secured by this deed then outstanding;
7.5 to manage the Vessel and to insure, maintain and repair the
Vessel and to hold, lay up, lease, charter, operate or
otherwise use the Vessel in such manner and for such period as
the Mortgagee in its absolute discretion deems expedient and
for the purposes aforesaid to do all acts and things
incidental or conducive thereto in all respects as if the
Mortgagee were the owner of the Vessel and without being
responsible for any loss thereby incurred;
7.6 to recover from the Owner on demand any such losses as may be
incurred by the Mortgagee in or about the exercise of the
power vested in the Mortgagee under Clause 7.5 together with
interest thereon at the Default Rate of Interest from the date
when such losses were incurred by the Mortgagee until the date
of payment or judgement;
7.7 to recover from the Owner on demand all expenses, payments and
disbursements incurred by the Mortgagee in or about or
incidental to the exercise by it or any of the powers
aforesaid together with interest thereon at the Default Rate
of Interest from the date when such expenses, payments or
disbursements were incurred by the Mortgagee until the date
of payment or judgement.
On any sale of the Vessel or any share in her by the Mortgagee
pursuant to this clause the purchaser shall not be bound to see or
enquire whether the Mortgagee's power of sale has arisen in the
manner provided in this deed. The sale shall be deemed to be within
the power of the Mortgagee and the receipt of the Mortgagee for the
purchase money shall effectively discharge the purchaser who shall
not be concerned with the manner of application of the proceeds of
sale or be in any way answerable for it.
8. APPLICATION OF PROCEEDS
8.1 All monies received by the Mortgagee in respect of:-
8.1.1 sale by it of the Vessel or any share therein;
8.1.2 recovery under any Owners Insurance;
8.1.3 Requisition Compensation;
shall be held by it upon trust in the first place to pay or
retain all such payments, disbursements, expenses and losses
whatsoever (together with interest thereon as hereinbefore
provided for) as may have been incurred by the Mortgagee in or
about or incidental to the exercise by the Mortgagee of the
powers specified or otherwise referred to in terms of this
deed or any of them and the balance shall be applied in the
manner following:-
8.1.4 firstly in or towards payment of all sums due to the
Mortgagee under the Sale and Purchase Agreement;
8.1.5 secondly in or towards payment of all other sums then
owing or which thereafter become owing under this deed;
and
8.1.6 thirdly the balance (if any) to be paid to the Owner.
8.2 Notwithstanding anything otherwise contained in this deed the
Mortgagee shall be entitled to negotiate, collect, recover,
sue for and give good discharges in the name of and as agent
for the Owner for all and/or any claim under any of the
Owner's Insurances the Mortgagee may compromise or refer to
arbitration any claim under any of the Owner's Insurances or
otherwise deal with it in such terms as the Mortgagee in its
absolute discretion thinks fit and any money received in
respect of any such claim shall, after deduction of commission
and any costs or charges, legal or otherwise incurred in the
recovery of such money be applied as provided in the foregoing
clause.
8.3 Notwithstanding the provision of Clause 8.1 any sums payable
in respect of any of the Owner's Insurance during the Security
Period shall be applied as follows:
8.3.1 in the event of a Total Loss the proceeds of all
insurance claims shall be payable to the Mortgagee
without deduction or withholding except only for
deduction of any amount (if any) of brokers collection
commission which is reasonable in view of prevailing
market practice at the time and such proceeds shall be
applied by the Mortgagee in accordance with the terms of
Clause 8.1 above; or
8.3.2 if no Event of Default shall have occurred in the event
of the occurrence of any loss or damage or liability
other than Total Loss, monies in respect of such loss,
damage or liability shall be paid to the Mortgagee or
the Owner (as applicable) in accordance with the
provisions of the applicable loss payable and notice of
cancellation clauses set out in Schedules 2 and 3 to
this deed (or such other forms as the Mortgagee shall
require) and (with regard to any such monies payable to
or received by the Mortgagee) the Mortgagee:
(i) shall consent to the underwriters insurers or
association paying directly for repairs, salvage
or other charges or (if applicable) making any
payment to any third party in settlement of any
liability of the Owner; or
(ii) if the Owner shall have first fully repaired the
damage or secured complete discharge of the
liability insured against shall reimburse the
Owner therefor to the full extent of the amount
that the Mortgagee shall have received from the
underwriters or insurers; and
8.3.3 if an Event of Default shall have occurred then in the
event of the occurrence of any loss, damage or liability
other than Total Loss, monies in respect of such loss,
damage or liability shall be paid to the Mortgagee and
shall be applied in the sole discretion of the Mortgagee
either in accordance with the terms of Clause 8.1 above
or in making good such loss or repairing such damage or
discharging such liability Provided that in such
circumstances, sums payable under any Protection and
Indemnity risks cover shall be applied in accordance
with the provision of the loss payable clause contained
in Schedule 3; and
8.3.4 if the Owner shall receive any insurance monies whether
under the hull and machinery policies or War Risks or
protection and indemnity cover before having made good
the loss or restoring such damage or discharging such
liability in respect of which the monies are paid the
Owner (save in the event of Total Loss or if any other
Event of Default shall have occurred when in either such
case such monies shall forthwith be paid to the
Mortgagee) will use such monies for the purpose of
making good such loss or restoring such damage or
discharging such liability and any monies not so used
shall unless the Mortgagee otherwise agrees be paid to
the Mortgagee and applied by the Mortgagee in accordance
with the terms of Clause 8.1 above.
9. POWER TO APPOINT RECEIVER
9.1 At any time after an Event of Default the Mortgagee shall have
power (but shall not be obliged) by instrument in writing to
appoint any person or persons (whether an officer or officers
of the Mortgagee or not) to be a Receiver or Receivers of the
Vessel and/or the other property charged by this deed and may
in like manner remove any such Receiver or Receivers.
9.2 A Receiver or Receivers shall be deemed to be the agent of
the Owner and the Owner shall be solely responsible for his
acts, defaults and remuneration and a Receiver shall have the
same powers as are conferred upon the Mortgagee by Clause 7
and the power to take any indemnity from the Owner from and
against all actions, claims, expenses, demands and liabilities
(whether arising out of contract or of tort or in any other
way whatever) incurred by him or by any manager, agent,
officers, servant or workman for whose debts, defaults or
miscarriages he may be answerable for anything done or omitted
to be done in the exercise or purported exercise of his powers
under this deed or under any appointment duly made under the
provisions of this clause and if he thinks fit (but without
prejudice to the foregoing) to effect with any insurance
company or office of underwriters any policy or policies of
insurance either in lieu of or satisfaction of or in addition
to such indemnity from the Owner.
9.3 The Owner irrevocably appoints any Receiver the attorney of
the Owner for the Owner and in its name and on its behalf and
as its acts and deed to execute, seal and deliver and
otherwise perfect any deed, assurance, agreement, instrument
or act which may be required or may be deemed proper for any
of the purposes aforesaid.
9.4 All money received by a Receiver shall be applied by him as
follows:
9.4.1 first in discharge of all rents, taxes, rates and
outgoings whatever affecting the Mortgaged Property;
9.4.2 secondly in keeping down all annual sums or other
payments and the interest on all principal sums having
priority to the Mortgage;
9.4.3 thirdly in payment of premiums on all insurances
properly payable under this deed;
9.4.4 fourthly in payment of the costs of executing necessary
or proper repairs directed in writing by the Mortgagee;
9.4.5 fifthly in meeting any costs, charges and expenses of or
incidental to the exercise of any of the powers of such
Receiver;
9.4.6 sixthly in or towards payment of remuneration to the
Receiver at such rate as may be agreed between him and
the person by whom his appointment was made;
9.4.7 seventhly in or towards satisfaction of the sums secured
by this deed.
10. DISCHARGE OF MORTGAGE
It is agreed and declared that on payment of all sums and
performance of all obligations secured by this Deed or by the
Mortgage before the security shall have become enforceable as
aforesaid and on payment of all costs, charges and expenses and the
discharge of all liabilities of the Mortgagee in relation to the
Vessel the Mortgagee will at the request and cost of the Owner
discharge the Mortgage, reassign to the Owner any other property
charged by this deed and deliver to the Owner all such policies,
certificates of entry and other documents relating to the Vessel as
may remain in the possession of the Mortgagee and, at the expense of
the Owner, give such notices and execute all such other documents as
may be reasonably required to achieve the same.
11. WAIVER
No delay in exercising or omission by the Mortgagee to exercise any
right or power vested in it under this deed or pursuant to the
Mortgage shall impair such right or power or be construed as a
waiver of or as an acquiescence in any default by the Owner and in
the event of the Mortgagee on any occasion agreeing to waive any
such right or power such waiver shall not in any way prejudice or
affect the right of Mortgagee afterwards to act strictly in
accordance with the powers conferred upon it under this deed or
pursuant to the Mortgage.
12. CONTINUING SECURITY
The security created by this deed and by the Mortgage shall be held
by the Mortgagee as a continuing security for the payment of all
sums which become due and payable and all other obligations which
may be required to be performed under or in respect of any of the
provisions of this deed and shall not be construed as satisfied by
any intermediate payment or satisfaction of the whole or any part of
any sum or sums of money secured by this deed notwithstanding that
the Indebtedness may from time to time be reduced to nil. Any
demand made from time to time in respect of the Indebtedness shall
not prevent the Mortgagee from making subsequent demands in respect
of the Indebtedness as and when the same shall fall due or impair or
discharge the security comprised in this deed and any collateral
mortgage.
13. RIGHT TO EXCHANGE ETC SECURITIES AND TO COMPOUND
The Mortgagee shall be at liberty at any time to grant any time or
indulgence to and exchange release and renew any securities and to
compound in any way it may think fit with any person or persons
either with or without knowledge of the Owner without affecting the
right of the Mortgagee under this deed.
14. RIGHT TO CONSOLIDATE
The provision of the Law of Property Act 1925 Sections 93 and 103 or
any re-enactment of those sections so far as applicable shall not
apply to this deed and the Mortgagee shall have the right to
consolidate.
15. PROPER LAW AND JURISDICTION
15.1 The Mortgage and this deed shall be construed in accordance
with and be governed by the law of England.
15.2 The Owner and the Mortgagee hereby submit to the exclusive
jurisdiction of the High Court of Justice in London, England.
16. NOTICES
16.1 Any notices given pursuant to this deed shall be in writing
and may be given by hand at, or sent by prepaid first class
post or facsimile transmission to, the appropriate address
stated in Clause 16.3 (or such other address as may be given
for the purposes of this deed by notice to the other party).
16.2 Any such notice given as aforesaid shall be deemed to have
been given at the time of delivery if delivered by hand or the
first Business Day following the day of sending it if sent by
facsimile transmission or the second Business Day following
the date of sending if sent by prepaid first class post
16.3 The respective addresses for service are:
The Owner: Reading & Bates (Caledonia) Limited
Rotech House
Whitemyres Avenue
Mastrick Industrial Estate
Aberdeen AB2 6NQ
Fax: 01224 690355
Attention: Managing Director
The Mortgagee: BP Exploration Operating Company Limited
Britannic House
1 Finsbury Circus
London EC2M 7BA
Fax: 0171 496 4630
Attention: Manager, Commercial
17. POWER OF ATTORNEY/FURTHER ASSURANCE
17.1 The Owner hereby irrevocably appoints the Mortgagee as its
attorney for the duration of the Security Period for the
purpose of doing in its name all acts which the Owner itself
could do in relation to the Vessel and its registration.
Without prejudice to the generality of the foregoing the
Mortgagee shall as attorney-in-fact in addition have the power
to sell the Vessel on the same terms mutatis mutandis as those
set out in Clause 7.4. above PROVIDED HOWEVER that such power
shall not be exercisable by or on behalf of the Mortgagee
until the happening of an Event of Default.
17.2 The exercise of such power by or on behalf of the Mortgagee
shall not put any person dealing with the Mortgage upon any
enquiry as to whether any of the Indebtedness shall have
become payable nor shall such person be in any way affected by
notice that any part of the Indebtedness has not become
payable and the exercise by the Mortgagee of such power shall
be conclusive evidence to such person of the Mortgagee's right
to exercise the same.
17.3 The Owner hereby further undertakes at its own expense that in
the event that this deed or any provision hereof or any
provision of the Mortgagee shall be deemed invalidated in
whole or in part by reason of any present of future law or any
decision of any competent or authoritative court or if either
this deed or the Mortgage shall be deemed by the Mortgagee for
any reason insufficient to carry out is true intent and
purpose from time to time promptly to sign, seal, execute,
deliver and register or procure the doing, signing, sealing,
execution, delivery and registration at its expense at no cost
to the Mortgagee of all such other and further acts assurances
and documents whatsoever as in the opinion of the Mortgagee
(acting reasonably) may be required more effectual to
mortgage, charge or assign the Mortgaged Property and secure
the Indebtedness and the performance of the terms and
provisions of this deed and the Mortgage or perfect the
security constituted thereby and the Owner hereby irrevocably
appoints the Mortgagee as its attorney for the purpose of
signing, executing (including as a deed), perfecting, doing
and registering every such further assurance, document, act or
thing as aforesaid for the duration of the Security Period.
IN WITNESS WHEREOF this deed has been executed as a deed on the day and
year first above written.
Executed as a Deed by
READING & BATES (CALEDONIA) LIMITED
acting by its attorney in the presence of:
BP EXPLORATION OPERATING COMPANY LIMITED
acting by its attorney
in the presence of:
===========================================================================
SCHEDULE 1
NOTICE OF ASSIGNMENT OF INSURANCE
(for attachment by way of endorsement to the Policy)
ESV "____________________________"
We, [Owner] of [ ] the Owners of the emergency support
vessel " " hereby give notice that by a first assignment
dated [ ] 199 and entered into by us with [ Mortgagee] there
has been assigned by us to the said [Mortgagee] as assignees all
insurances in respect of the said vessel including the insurances
constituted by the Policy on which this notice is endorsed.
BY: ______________________________
TITLE: __________________________
===========================================================================
SCHEDULE 2
LOSS PAYABLE CLAUSE FOR HULL & WAR RISKS POLICIES
ESV "____________________________________"
It is noted that by an assignment in writing dated 199 [
] the Owner of the above mentioned vessel has assigned absolutely
to [ ] (hereinafter called the "First Mortgagee") all
the Owner's interests in this Policy and all benefits hereof
including all claims of whatsoever nature hereunder.
Claims hereunder payable in respect of an actual or constructive or
agreed or arranged or compromised total loss or requisition of the
Vessel and claims hereunder payable in respect of a major casualty
that is to say any casualty in respect whereof the claim or the
aggregate of the claims exceeds two hundred and fifty thousand
United States Dollars (US $250,000) shall be payable to the First
Mortgagee.
All other claims, unless and until the Brokers have received notice
from the First Mortgagee of a default under the Mortgage, (in which
event all claims under this Policy of Insurance shall be payable
direct to the First Mortgagee), shall be released directly for the
repair salvage or other charges involved or, if the Owner has paid
such charges, in reimbursement thereof to the Owner.
=============================================================================
SCHEDULE 3
LOSS PAYABLE CLAUSE FOR PROTECTION AND INDEMNITY
RISK POLICIES
"Payment of any recovery the Owner is entitled to make out of the
funds of the insurer in respect of any liability, costs or expenses
incurred by him shall be made to the Owner or to their order unless
and until the insurer receives notice from [Mortgagee] that the
Owner is in default under a first Mortgage dated , in
which event all recoveries shall thereafter be negotiated and
settled by the insurer and/or the Owner directly with the relevant
third party and all sums shall be applied in satisfaction of the
Owners liability thereto provided always that no liability
whatsoever shall attach to the association, its managers or their
agents for failure to comply with the obligations herein until after
the expiry of 2 clear business days from the receipt of such
notice."
EXHIBIT 10.7
DATED 8TH SEPTEMBER 1995
READING & BATES (CALEDONIA) LIMITED (1)
BRITOIL PUBLIC LIMITED COMPANY (2)
DEED OF COVENANT
==========================================================================
THIS DEED OF COVENANT is made the 8th day of September 1995
BETWEEN:-
(1) READING & BATES (CALEDONIA) LIMITED, registered in England (No.
1591065) whose registered office is at Harman House, 1 George
Street, Uxbridge, Middlesex UB8 IQQ ("the Owner" which expression
shall include its successors and permitted assigns); and
(2) BRITOIL PUBLIC LIMITED COMPANY, whose registered office is situate
at Burnside Road, Farburn Industrial Estate, Dyce, Aberdeen AB2 OPB
("the Mortgagee" which expression shall include its successors and
permitted assigns).
WHEREAS:
(A) The Owner is the absolute sole legal and beneficial owner of the
Vessel free from all mortgages, liens, charges and incumbrances
whatever other than the BP Mortgage.
(B) The Owner and the Mortgagee have entered into the Services
Agreements in relation to the use of the Vessel in the period
following the date hereof which regulates the use of the Vessel;
(C) This deed is supplemental to a mortgage over the Vessel and of even
date with this deed ("the Mortgage").
NOW THIS DEED WITNESSETH as follows:-
1. DEFINITIONS
1.1 In this agreement the words and phrases set out below shall have
the meanings ascribed to them:-
"Approved Brokers" means insurance brokers appointed by the Owner
from time to time and approved by the Mortgagee
(such approval not to be unreasonably withheld
or delayed);
"BP" means BP Exploration Operating Company Limited
(Company number 305943);
"BP Mortgage" means the statutory mortgage over all sixty
four sixty fourth (64/64h) shares of the Vessel
and the deed of covenant dated of even date
herewith between the Owner and BP;
"Business Day" means any day on which banks in the City of
London are normally open for business (other
than Saturday);
"Default Rate means the Reference Interest Rate (as defined
of Interest" in the sale and purchase agreement of even date
herewith entered into between BP and the Owner
in relation to the Vessel) plus Two (2)
percentage points;
"Excess Risks" means the proportion of claims for general
average and salvage charges and under the
ordinary running down clause not recoverable in
consequence with the value at which a Vessel is
assessed for the purpose of such claims
exceeding her insured value;
"Event of Default" means any event specified in Clause 6 of this
Agreement;
"the Long Term means (i) an agreement to be entered into between
Services Agreement" the Owner and the Mortgagee in respect of the
provision of vessel services to the Mortgagee
to follow upon a Heads of Agreement for the
provision of vessel services between the Owner,
the Mortgagee and Reading & Bates Corporation
and dated of even date herewith and (ii) the
said Heads of Agreement to the extent that the
agreement to be entered into following upon the
said Heads of Agreement referred to in (i)
above shall not for any reason be entered into
between the Mortgagee and the Owner and the
vessel services referred to in the said Heads
of Agreement are provided under such Heads of
Agreement;
"Indebtedness" means all monies and/or liabilities of
whatsoever nature referred to in Clause 2 of
this Deed whensoever and howsoever arising from
time to time;
"the Initial Services means the Initial Services Agreement (No. 101237)
Agreement" between the Owner and the Mortgagee dated of even
date herewith in respect of the provision of
construction support vessel services for
Foinaven Development to the Mortgagee;
"the Mortgage" means a statutory mortgage over all sixty four
sixty fourth (64/64th) shares of the Vessel
dated of even date herewith mentioned in
recital (C);
"Mortgaged Property" includes:-
(a) all sixty four sixty fourth (64/64th) shares
of the Vessel;
(b) Owner's Insurances and all benefits thereof
(including claims of whatsoever nature and
return of premiums);
(c) Requisition Compensation.
"Owner's Insurances" includes all policies and contracts of
insurance (which expression includes all
entries of the Vessel in a protection and
indemnity or War Risks association) which
are from time to time during the Security
Period taken out or entered into by the
Owner in respect of the Vessel or otherwise
in connection with the Vessel and shall
include (without limitation) the benefits of
claims of whatever nature and return of
premiums;
"Protection and means the usual risks covered by an English or
Indemnity Risks" Norwegian protection and indemnity association
including the proportion not recoverable in
case of a collision and the ordinary running
down clause;
"Reading & Bates means Reading & Bates Corporation a company
Corporation" incorporated under the laws of Delaware and
having its principal place of business at 901
Threadneedle, Suite 200, Houston, Texas 77079-
2902, United States of America;
"Receiver" means a receiver appointed pursuant to the
provisions of Clause 9 of this Deed;
"Required Insurance" means any insurance or entry referred to in
Clause 4.1 of this Agreement;
"Requisition means all monies or other compensation payable
Compensation" during the Security Period by reason of
requisition for title or other compulsory
acquisition of the Vessel otherwise than by
requisition for use or hire not involving
requisition of title;
"Security Period" means the period commencing on the date hereof
and terminating upon whichever shall be the
later of:
(i) the date which the Initial Services
Agreement and the Long Term Services
Agreement shall terminate for whatever
reason; or
(ii) the date upon which all monies payable
to the Mortgagee under this Deed shall
have been paid to the Mortgagee;
"the Services Agreements" means the Initial Services Agreement and the
Long Term Services Agreement;
"Total Loss" means:-
(a) actual or constructive or compromised or
arranged total loss of the Vessel; or
(b) requisition for title or other compulsory
acquisition of the Vessel other than by
requisition for use or hire not involving
requisition of title;
"The Vessel" means the semi-submersible emergency support
vessel Iolair registered in Dundee, United
Kingdom, registered number 376461 and includes
any share or interest therein and her engines,
machinery, boats, tackle, outfit, spare gear,
fuel or other stores, belongings and
appurtenances whether on board or ashore;
"War Risks" includes the risk of mines and all risks
excluded from the standard form of English or
Norwegian marine policy by the "free of capture
and seizure" clause;
2. COVENANT OF THE OWNER
The Owner covenants and agrees with the Mortgagee:-
2.1 to pay to the Mortgagee all amounts of liquidated damages
becoming payable by the Owner to the Mortgagee in terms of
Clause 32 of the Initial Services Agreement;
2.2 to pay to the Mortgagee all amounts of liquidated damages
becoming payable by the Owner to the Mortgagee in terms of
the Long Term Services Agreement (such liquidated damages
being payable in terms of Clause 15 of the Heads of Agreement
referred to in the definition of "the Long Term Services
Agreement and/or the equivalent or similar provisions of the
agreement to be entered into in replacement of and pursuant
to such Heads of Agreement);
2.3 to pay to the Mortgagee all sums becoming payable in terms of
this deed.
3. CHARGE OF VESSEL
By way of security for payment of the sums and performance of the
other obligations referred to in Clause 2 the Owner mortgages and
charges to and in favour of the Mortgagee with full title guarantee
all its interest present and future in the Mortgaged Property (and
the Owner warrants the Vessel to be free at the date of this deed
from any other charge or incumbrance whatever other than the BP
Mortgage) and without prejudice to the generality of the foregoing
the Owner assigns and agrees to assign to the Mortgagee all
policies of insurance that have been or may be taken out in respect
of the Vessel and all the benefits of such policies including
(without limitation) claims of whatever nature and return of
premiums.
4. COVENANTS BY OWNER
The Owner further covenants with the Mortgagee that during the
Security Period.
4.1 it will insure at the Owner's cost, the Vessel:-
4.1.1 in the joint names of the Owner and the Mortgagee
(but without liability on the part of the Mortgagee
for premiums or calls) against all marine risks which
are from time to time insurable (including War Risks
and kindred perils and Excess Risks) on an agreed
value basis. All policies taken out and entries made
in compliance with the Owner's obligations under this
Clause shall bear a loss payable clause in the terms
set out in Schedule 2 to this deed or in such other
terms as the Mortgagee may reasonably approve in
writing; and
4.1.2 in the joint names of the Owner and the Mortgagee
(but without any liability on the part of the
Mortgagee for premiums and calls) and such other
names as shall from time to time be approved in
writing by the Mortgagee for the full value and
tonnage of the Vessel against Protection and
Indemnity Risks (including but not limited to the
proportion not recoverable in case of collision under
the ordinary running down clause) and claims of
employees, servants, agents or sub contractors of the
Owner, any charterer of the Vessel, passengers, or
third parties and their respective dependents, and
against such other risks as may be required by
statute, order or regulation of the United Kingdom
and of all other countries to whose jurisdiction the
Vessel may from time to time become subject or of
which the Mortgagee may reasonably direct. All
policies taken out and entries made in compliance
with the Owner's obligations under this clause shall
bear a loss payable clause in the terms set out in
Schedule 2 to this deed or in such other terms as the
Mortgagee may reasonably approve in writing.
4.2 each policy or entry taken out or effected in compliance with
the terms of clause 4.1 above shall be effected through such
brokers and with such insurance companies, underwriters or
War Risks or protection and indemnity associations as the
Mortgagee may reasonably approve and shall be in such form
and upon such terms as the Mortgagee shall from time to time
reasonably approve in writing. The Owner shall forthwith
give or cause the Approved Brokers to give notice of the
assignment of the Owner's Insurances in the form set out in
Schedule 1 to this deed or in such other form as the
Mortgagee may require to all insurers, underwriters, clubs
and associations providing insurance in connection with the
Vessel and similar notice shall be given from time to time to
any further insurers, underwriters, clubs and associations
providing insurance in connection with the Vessel.
4.3 it will punctually pay all such premiums, calls,
contributions or other sums as may be required in order to
insure and enter the Vessel in accordance with the terms of
this Deed, and to keep the Vessel so insured and entered and
it will produce to the Mortgagee the receipts (or other
evidence of payment) for such premiums, calls, contributions
or other sums within 14 days of such payment. The Owner shall
not take credit in respect of the payment of premiums or call
or contributions without the prior approval of the Mortgagee
and the Owner shall procure that the Approved Brokers and any
insurance companies or underwriters with which the Vessel is
insured and any protection and indemnity association and/or
war risk association in which the Vessel is entered shall
waive any lien for premiums or calls except in relation to
premiums or calls attributable to the Vessel.
4.4 it will renew all Required Insurances at least fourteen (14)
days before the relevant policies or contracts expire and
procure that the Approved Brokers shall promptly confirm in
writing to the Mortgagee as and when each such renewal is
effected;
4.5 it will arrange for the execution of such guarantees as may
from time to time be required by any protection and indemnity
or War Risks association;
4.6 it will procure that the interest of the Mortgagee as
mortgagee of the Vessel and assignee of the Required
Insurance is duly indorsed or noted on all slips, cover
notes, policies, certificates of entry or other instruments
of insurance issued in connection with any Owners Insurances;
4.7 it will procure that all slips, cover notes, policies,
certificates of entry or other instruments of insurance
relating to a Required Insurance shall be deposited with the
Approved Brokers and that the Approved Brokers shall if at
any time reasonably required, allow representatives of the
Mortgagee access during normal office hours and upon the
giving of reasonable notice to inspect such slip, cover note,
policy, certificate of entry or other instrument of insurance
to the Mortgagee;
4.8 it will procure that the Approved Brokers and any
associations or clubs through whom the Required Insurances
are placed furnish the Mortgagee a letter or letters of
undertaking in such form as may be reasonably required by the
Mortgagee;
4.9 it will deliver to the Mortgagee duplicates or certified
copies of all policies relating to the Required Insurances
and it will assign to the Mortgagee all sums insured by or to
become payable under such policies or any of them and the
full benefit of them and do all such things and execute all
such documents as shall create legal title in such policies
or the proceeds of them in the Mortgagee;
4.10 it will not (without the prior written consent of the
Mortgagee such consent not to be unreasonably withheld or
delayed) alter any Required Insurance nor do anything nor
suffer anything to be done whereby any Required Insurance on
the Vessel or any cover afforded by the rules of any mutual
association in which the Vessel is entered may be or become
void or unenforceable or whereby any sum paid out under any
Required Insurance may be or become payable;
4.11 it will keep the Vessel registered as a British Vessel at the
port of registry in a United Kingdom (without the prior
written consent of the Mortgagee which consent may be refused
by the Mortgagee at its sole discretion or granted subject to
conditions) and not do or suffer to be done anything whereby
such registration may be forfeited or imperilled;
4.12 it will not employ or permit the Vessel to be employed in any
illicit trade or in carrying any illicit or prohibited goods;
4.13 it will not without the prior written consent of the
Mortgagee (and then only subject to such terms as the
Mortgagee may impose) (and save as permitted under the
Services Agreements) let or employ the Vessel:
4.13.1 on demise charter for any period; or
4.13.2 on any charterparty contract of affreightment or
other contract of employment for a period which
exceeds, or which by virtue of any optional
extensions may exceed, 6 months; or
4.13.3 below the market rate prevailing when the Vessel is
fixed for such letting or employment.
4.14 it will maintain the Vessel in a good and efficient state or
repair so to maintain her present class namely + OUIOOA and
keep her at all times in thoroughly good and seaworthy repair
and good order and decorative condition so as to make her
comply with all regulations and requirements of the laws of
government of the United Kingdom and of any country where the
Vessel may at any time be and renew and replace to the
reasonable satisfaction of the Mortgagee all parts and
equipment as and when they may become worn out, damaged or
lost with parts and equipment of a similar nature (as regards
workmanship and quality of materials) and of at least equal
value;
4.15 it will permit the Mortgagee to inspect the condition of the
Vessel at all reasonable times and upon reasonable prior
notice and with the prior consent of any charterer and give
the Mortgagee sufficient notice whenever practicable of
surveys and major repairs so as to enable the Mortgagee's
surveyors to attend them and if on making such inspection the
Mortgagee shall discover any defect the Mortgagee may call
upon the Owner to restore and make good and repair the same
and if any defect or defects are not repaired, restored and
made good to the satisfaction of the Mortgagee having
notified the Owner thereof and after a reasonable period
(which shall not exceed in any event a period of 30 days from
the date of such notification by the Mortgagee) the Mortgagee
shall be at liberty at the expense of the Owner to repair,
restore and make good such defect or defects or to engage
others to do the work and debit all sums so expended by the
Mortgagee to the account of the Owner.
4.16 it will notify the Mortgagee forthwith by letter or in the
case or urgency by telegram or telex:-
4.16.1 of any accident or damage to the Vessel involving re-
pairs the cost of which is likely to exceed L250,000
pounds (or the equivalent in any other currency);
4.16.2 of any occurrence whereby the Vessel has or is likely
to become a Total Loss;
4.16.3 of any actual or threatened arrest, detention,
seizure, confiscation or requisition for title or
use of the Vessel;
4.16.4 of any requirement of insurers or any competent
authority which is not immediately carried out; and
4.16.5 of the happening of any Event of Default;
4.17 in the event of any requisition for title or use or seizure
of the Vessel by any authority it will take all such steps
and execute all such documents at its own expense as may be
reasonably requested by the Mortgagee to ensure the
Mortgagee's security interest in any payment or compensation
in respect of such requisitioning or seizure;
4.18 it will permit the Mortgagee to exercise all rights and
remedies given to it by this deed by the Mortgage by law and
otherwise and pay to the Mortgagee within 7 days of demand
being made all sums whatever which the Mortgagee may pay or
become liable to pay (including legal costs on a full
indemnity basis) in connection with the protection
maintenance and enforcement of the security created by this
deed and by the Mortgage or the exercise of any of the
aforesaid rights and remedies;
4.19 it will not without the prior written consent of the
Mortgagee (which consent shall not be unreasonably withheld
or delayed) make any modifications or alterations to the
speed or structure of the Vessel or to the machinery or
equipment of the Vessel that are not required for the
performance of the Owners obligations under the Services
Agreements;
4.20 it will submit the Vessel regularly to such periodical or
other surveys as may be required for classification purposes
and if so required to supply to the Mortgagee copies of all
survey reports issued in respect thereof;
4.21 it will pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens on or claims enforceable against the Vessel
and in any event of arrest of the Vessel pursuant to legal
process or in the event of her detention in exercise or
purported exercise of any such lien as aforesaid to procure
the release of such Vessel from such arrest or detention
forthwith upon receiving notice thereof by providing bail or
otherwise as the circumstances may require;
4.22 it will promptly furnish the Mortgagee with all such
information as it may from time to time require and which is
not confidential regarding the Vessel and her employment
position and engagements, particulars of all towages and
salvages and copies of all charters and other contracts where
her employment or otherwise howsoever concerning her;
4.23 it will promptly pay all tolls, dues and other outgoings
whatsoever in respect of the Vessel and keep proper books of
account in respect of the Vessel and as and when the
Mortgagee may reasonably so require make such books available
for inspection on behalf of the Mortgagee and it will fumish
satisfactory evidence that the wages and allotments and the
insurance and pension contributions of the Master and crew
are being regularly paid and that all deductions from the
crews wages in respect of all applicable tax liabilities are
being promptly accounted for and that the Master has no claim
for disbursements other than those incurred by him in the
ordinary course of trading on the voyage progress;
4.24 it will not (save as envisaged by this Deed) mortgage,
charge, sell, assign, abandon or otherwise encumber or assign
the Vessel or offer the creation of any such mortgage, charge
or assignment as aforesaid to or in favour of any person
other than the Mortgagee and/or BP without the prior written
consent of the Mortgagee, the giving or refusal of such
consent to be in the absolute discretion of the Mortgagee and
the Mortgagee may give any such consent upon such terms as it
may deem fit;
4.25 it will not without the previous consent in writing of the
Mortgagee put the Vessel into the possession of any person
for the purpose of work being done upon her in an amount
exceeding or likely to exceed two hundred and fifty thousand
pounds (L250,000) (or the equivalent in any other currency)
unless such person shall first have given to the Mortgagee in
terms satisfactory to it a written undertaking not to
exercise any lien on the Vessel for the cost of such work or
otherwise;
4.26 it will pay to the Mortgagee within Thirty (30) days of a
demand therefor all monies whatsoever which the Mortgagee
shall or may reasonably and properly expend, be put to or
become liable for in or about the protection, maintenance or
enforcement of the security created by this deed or the
Mortgage or in or about the exercise by the Morgagee of any
of the powers vested in it hereunder or thereunder and to pay
interest thereon at the Default Rate of Interest insofar as
such monies have not been paid within the said period of
thirty (30) days from the date whereon such expense or
liability was due to the Mortgagee to the date of payment as
well before as after judgement;
5. PROTECTION OF SECURITY
The Mortgagee shall (without prejudice to any other rights or
powers to which it may be entitled) be entitled but not bound at
all times to take any such action it may think for the purpose of
protecting the security created by this deed and by the Mortgage
and in particular (but without prejudice to the generality of the
foregoing) if the Owner shall at any time fail to make any payment
(other than a payment due to the Mortgagee) or do any thing
required to be made or done which is an Event of Default or which
would with the passing of time or on the giving of notice
constitute an Event of Default by the terms of this deed the
Mortgagee may make such payment or do such thing itself and the
Owner shall on demand pay to the Mortgagee an amount equal to such
payment or the costs of expenses incurred by the Mortgagee in doing
such thing and the amount paid together with interest on it shall
be added to the amount secured by this deed and by the Mortgagee.
The exercise by the Mortgagee of its rights under this Clause 5
shall not affect its right to treat the failure of the Owner to
make such payment or do such thing as an Event of Default pursuant
to Clause 6.
6. EVENTS OF DEFAULT
The following events shall be deemed to be Events of Default
namely:-
6.1 the Owner fails to pay when due any sum payable by the Owner
to the Mortgagee in respect of the Indebtedness within five
(5) Business Days of such due date at the place and in the
manner expressed to be payable; or
6.2 the Owner fails to perform and observe any of the covenants
conditions, agreements and stipulations on its part contained
in this deed and such failure, if capable of remedy,
continues unremedied (in the case of a material obligation of
the Owner under this Deed) for fourteen (14) days and (in the
case of any other obligations hereunder) for thirty (30)
days, after the Mortgagee has requested in writing the same
to be remedied; or
6.3 notice is given to the Mortgagee that any Required Insurance
is to be altered, amended or cancelled or has not been
renewed at least fourteen (14) days prior to its renewal date
and the Owner does not within (10) days of the date of such
notice effect an alternative Required Insurance reasonably
satisfactory to the Mortgagee or renew the existing Required
Insurance; or
6.4 an order is made or a resolution (whether requiring
confirmation or not) is passed for the winding up of the
Owner, or
6.5 an execution or arrest or diligence or distress is levied on,
sued out upon or enforced against any of the assets of the
Owner and is not paid and discharged within thirty (30) days;
or
6.6 the Owner suspends payment of its debts, becomes unable or
admits in writing its inability to pay its debts, makes a
general assignment for the benefit of or enters into any
composition or arrangement of any kind with its creditors,
ceases or threatens to cease to carry on business or disposes
of all or (without the prior written consent of the
Mortgagee) a substantial part of its assets; or
6.7 a receiver, administrator, administrative receiver or trustee
is appointed in respect of the Owner or over all or
substantially all of its assets; or
6.8 there occurs any of the events specified in Clauses 6.4 - 6.7
or any event analogous thereto in relation to Reading & Bates
Corporation; or
6.9 the Vessel is lost (whether such loss is an actual or
constructive total loss or compromised or arranged or agreed
total loss) abandoned captured, seized, confiscated
compulsorily, acquired or requisitioned for title;
6.10 the Owner fails to make a payment of any other indebtedness
when due or any event act or condition occurs or exists under
any document under which any such indebtedness is created or
evidencing the terms thereof if the effect thereof is to
cause the same to become due or permit any person to declare
the same due prior to its normal maturity or to create or
crystallise any encumbrance over the whole or any part of the
undertaking, property, assets or revenues of the Owner.
and on the happening of any such Event of Default the full amount
secured by this deed shall become immediately due and payable upon
demand being made and the Mortgagee shall be entitled but shall not
be obliged to immediately put into force and to exercise all the
powers possessed by it as mortgagee and chargee of the Vessel and
other property charged by this deed and (without prejudice to the
generality of the foregoing) to put into force and to exercise all
or any of the powers conferred on the Mortgagee under Clauses 7 and
8.
7. MORTGAGEES' REMEDIES
Time shall be considered as of the essence in relation to the
payment of any sums or performance of any obligation referred to in
clause 2 of this Deed and the performance of any other obligation
undertaken by the Owner in terms of this Deed and on the happening
of any Event of Default the Mortgagee shall be entitled as and when
it shall think fit with or without notice or further demand to put
into force and exercise all the powers and remedies possessed by it
according to law as mortgagee and chargee of the Vessel and other
property charged by this deed and in particular:
7.1 to take possession of the Vessel;
7.2 to collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under any
policy or contract of insurance (which expression shall
include all entries in a War Risks or protection and
indemnity association) relating to the Vessel and to take
over or institute all such proceedings in connection with
such insurance as the Mortgagee in its absolute discretion
thinks fit and to permit the brokers through whom collection
or recovery is effected to charge and retain the usual
brokerage therefor;
7.3 to discharge, compound, release or compromise claims in
respect of the Vessel which have given or may rise to any
charge or lien on the Vessel in priority to the Mortgagee or
which are or may be enforceable by proceedings against the
Vessel;
7.4 to sell the Vessel or any share in her by public auction or
private contract at any place in the world for cash or credit
and otherwise upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any
such sale and without being answerable for any loss
occasioned by such sale or resulting from postponement
thereof and at any such public sale to become the purchaser
and set off the purchase price against any sums secured by
this deed then outstanding;
7.5 to manage the Vessel and to insure, maintain and repair the
Vessel and to hold, lay up, lease, charter, operate or
otherwise use the Vessel in such manner and for such period
as the Mortgagee in its absolute discretion deems expedient
and for the purposes aforesaid to do all acts and things
incidental or conductive thereto in all respects as if the
Mortgagee were the owner of the Vessel and without being
responsible for any loss thereby incurred;
7.6 to recover from the Owner on demand any such losses as may be
incurred by the Mortgagee in or about the exercise of the
power vested in the Mortgagee under Clause 7.5 together with
interest thereon at the Default Rate of Interest from the
date when such losses were incurred by the Mortgagee until
the date of payment or judgement;
7.7 to recover from the Owner on demand all expenses, payments
and disbursements incurred by the Mortgagee in or about or
incidental to the exercise by it of any of the powers
aforesaid together with interest thereon at the Default Rate
of Interest from the date when such expenses, payments or
disbursements were incurred by the Mortgagee until the date
of payment or judgement.
On any sale of the Vessel or any share in her by the Mortgagee
pursuant to this clause the purchaser shall not be bound to see or
enquire whether the Mortgagee's power of sale has arisen in the
manner provided in this deed. The sale shall be deemed to be
within the power of the Mortgagee and the receipt of the Mortgagee
for the purchase money shall effectively discharge the purchaser
who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable for it.
8. APPLICATION OF PROCEEDS
8.1 All monies received by the Mortgagee in respect of:-
8. 1.1 sale by it of the Vessel or any share therein;
8.1.2 recovery under any Owners Insurance;
8.1.3 Requisition Compensation;
shall be held by it upon trust in the first place to pay or
retain all such payments, disbursements, expenses and losses
whatsoever (together with interest thereon as hereinbefore
provided for) as may have been incurred by the Mortgagee in
or about or incidental to the exercise by the Mortgagee of
the powers specified or otherwise referred to in terms of
this deed or any of them and the balance shall be applied in
the manner following:-
8.1.4 firstly in or towards payment of any amounts of
liquidated damages due in terms of Clause 32 of the
Initial Services Agreement;
8.1.5 secondly in or towards payment of any amounts of
liquidated damages due in terms of Clause 15 of the
Heads of Agreement and such similar clause in the
Long Term Service Agreement in replacement thereof;
8.1.6 thirdly in or towards payment of all other sums then
owing or which thereafter become owing under this
deed; and
8.1.7 fourthly the balance (if any) to be paid to the
Owner.
8.2 Notwithstanding anything otherwise contained in this deed the
Mortgagee shall be entitled to negotiate, collect, recover,
sue for and give good discharges in the name of and as agent
for the Owner for all and/or any claim under any of the
Owner's Insurances the Mortgagee may compromise or refer to
arbitration any claim under any of the Owner's Insurances or
otherwise deal with it in such terms as the Mortgagee in its
absolute discretion thinks fit and any money received in
respect of any such claim shall, after deduction of
commission and any costs or charges, legal or otherwise
incurred in the recovery of such money be applied as provided
in the foregoing clause.
8.3 Notwithstanding the provisions of Clause 8.1 any sums payable
in respect of any of the Owner's Insurances during the
Security Period shall be applied as follows:
8.3.1 in the event of a Total Loss the proceeds of all
insurance claims shall be payable to the Mortgagee
without deduction or withholding except only for
deduction of an amount (if any) of brokers collection
commission which is reasonable in view of prevailing
market practice at the time and such proceeds shall
be applied by the Mortgagee in accordance with the
terms of Clause 8.1 above; or
8.3.2 if no Event of Default shall have occurred in the
event of the occurrence of any loss or damage or
liability other than Total Loss, monies in respect of
such loss, damage or liability shall be paid to the
Mortgagee or the Owner (as applicable) in accordance
with the provisions of the applicable loss payable
and notice of cancellation clauses set out in
Schedules 2 and 3 to this deed (or such other forms
as the Mortgagee shall require) and (with regard to
any such monies payable to or received by the
Mortgagee) the Mortgagee:
(i) shall consent to the underwriters insurers
or association paying directly for repairs,
salvage or other charges or (if applicable)
making any payment to any third party in
settlement of any liability of the Owner;
or
(ii) if the Owner shall have first fully
repaired the damage or secured complete
discharge of the liability insured against
shall reimburse the Owner therefor to the
full extent of the amount that the
Mortgagee shall have received from the
underwriters or insurers; and
8.3.3 if an Event of Default shall have occurred then
in the event of the occurrence of any loss,
damage or liability other than Total Loss, monies
in respect of such loss, damage or liability
shall be paid to the Mortgagee and shall be
applied in the sole discretion of the Mortgagee
either in accordance with the terms of Clause 8.1
above or in making good such loss or repairing
such damage or discharging such liability
Provided that in such circumstances sums payable
under any Protection and Indemnity risks cover
shall be applied in accordance with the provision
of the loss payable clause contained in Schedule
3; and
8.3.4 if the Owner shall receive any insurance monies
whether under the hull and machinery policies or
War Risks or protection and indemnity cover
before having made good the loss or restoring
such damage or discharging such liability in
respect of which the monies are paid the Owner
(save in the event of Total Loss or if any other
Event of Default shall have occurred when in
either such case such monies shall forthwith be
paid to the Mortgagee) will use such monies for
the purpose of making good such loss or restoring
such damage or discharging such liability and any
monies not so used shall unless the Mortgagee
otherwise agrees be paid to the Mortgagee and
applied by the Mortgagee in accordance with the
terms of Clause 8. 1 above.
9. POWER TO APPOINT RECEIVER
9.1 At any time after an Event of Default the Mortgagee shall
have power (but shall not be obliged) by instrument in
writing to appoint any person or persons (whether an
officer or officers of the Mortgagee or not) to be a
Receiver or Receivers of the Vessel and/or the other
property charged by this deed and may in like manner
remove any such Receiver or Receivers.
9.2 A Receiver or Receivers shall be deemed to be the agent of
the Owner and the Owner shall be solely responsible for
his acts, defaults and remuneration and a Receiver shall
have the same powers as are conferred upon the Mortgagee
by Clause 7 and the power to take any indemnity from the
Owner from and against all actions, claims, expenses,
demands and liabilities (whether arising out of contract
or of tort or in any other way whatever) incurred by him
or by any manager, agent, officer, servant or workman for
whose debts, defaults or miscarriages he may be answerable
for anything done or omitted to be done in the exercise or
purported exercise of his powers under this deed or under
any appointment duly made under the provisions of this
clause and if he thinks fit (but without prejudice to the
foregoing) to effect with any insurance company or office
of underwriters any policy or policies of insurance either
in lieu of or satisfaction of or in addition to such
indemnity from the Owner.
9.3 The Owner irrevocably appoints any Receiver the attorney
of the Owner for the Owner and in its name and on its
behalf and as its acts and deed to execute, seal and
deliver and otherwise perfect any deed, assurance,
agreement, instrument or act which may be required or may
be deemed proper for any of the purposes aforesaid.
9.4 All money received by a Receiver shall be applied him as
follows:
9.4.1 first in discharge of all rents, taxes, rates and
outgoings whatever affecting the Mortgaged
Property;
9.4.2 secondly in keeping down all annual sums or other
payments and the interest on all principal sums
having priority to the Mortgage;
9.4.3 thirdly in payment of premiums on all insurances
properly payable under this deed;
9.4.4 fourthly in payment of the costs of executing
necessary or proper repairs directed in writing
by the Mortgagee;
9.4.5 fifthly in meeting any costs, charges and
expenses of or incidental to the exercise of any
of the powers of such Receiver;
9.4.6 sixthly in or towards a payment of remuneration
to the Receiver at such rate as may be agreed
between him and the person by whom his
appointment was made;
9.4.7 seventhly in or towards satisfaction of the sums
secured by this deed.
10. DISCHARGE OF MORTGAGE
It is agreed and declared that on payment of all sums and
performance of all obligations secured by this Deed or by the
Mortgage before the security shall have become enforceable as
aforesaid and on payment of all costs, charges and expenses and the
discharge of all liabilities of the Mortgagee in relation to the
Vessel the Mortgagee will at the request and cost of the Owner
discharge the Mortgage, reassign to the Owner any other property
charged by this deed and deliver to the Owner all such policies,
certificates of entry and other documents relating to the Vessel as
may remain in the possession of the Mortgagee and, at the expense
of the Owner, give such notices and execute all such other
documents as may be reasonably required to achieve the same.
11. WAIVER
No delay in exercising or omission by the Mortgagee to exercise any
right or power vested in it under this deed or pursuant to the
Mortgage shall impair such right or power or be construed as a
waiver of or as an acquiescence in any default by the Owner and in
the event of the Mortgagee on any occasion agreeing to waive any
such right or power such waiver shall not in any way prejudice or
affect the right of the Mortgagee afterwards to act strictly in
accordance with the powers conferred upon it under this deed or
pursuant to the Mortgage.
12. CONTINUING SECURITY
The security created by this deed and by the Mortgage shall be held
by the Mortgagee as a continuing security for the payment of all
sums which become due and payable and all other obligations which
may be required to be performed under or in respect of any of the
provisions of this deed and shall not be construed as satisfied by
any intermediate payment or satisfaction of the whole or any part
of any sum or sums of money secured by this deed notwithstanding
that the Indebtedness may from time to time be reduced to nil. Any
demand made from time to time in respect of the Indebtedness shall
not prevent the Mortgagee from making subsequent demands in respect
of the Indebtedness as and when the same shall fall due or impair
or discharge the security comprised in this deed and any collateral
mortgage.
13. RIGHT TO EXCHANGE ETC SECURITIES AND TO COMPOUND
The Mortgagee shall be at liberty at any time to grant any time or
indulgence to and exchange release and renew any securities and to
compound in any way it may think fit with any person or persons
either with or without knowledge of the Owner without affecting the
right of the Mortgagee under this deed.
14. RIGHT TO CONSOLIDATE
The provisions of the Law of Property Act 1925 Sections 93 and 103
or any re- enactment of those sections so far as applicable shall
not apply to this deed and the Mortgagee shall have the right to
consolidate.
15. PROPER LAW AND JURISDICTION
15.1 The Mortgage and this deed shall be construed in
accordance with and be governed by the law of England.
15.2 The Owner and the Mortgagee hereby submit to the exclusive
jurisdiction of the High Court of Justice in London,
England.
16. NOTICES
16.1 Any notices given pursuant to this deed shall be in
writing and may be given by hand at, or sent by prepaid
first class post or facsimile transmission to, the
appropriate address stated in Clause 16.3 (or such other
address as may be given for the purposes of this deed by
notice to the other party).
16.2 Any such notice given as aforesaid shall be deemed to have
been given at the time of delivery if delivered by hand or
the first Business Day following the day of sending it if
sent by facsimile transmission or the second Business Day
following the date of sending if sent by prepaid first
class post
16.3 The respective addresses for service are:
The Owner: Reading & Bates (Caledonia) Limited
Rotech House
Whitemyres Avenue
Mastrick Industrial Estate
Aberdeen AB2 6NQ
Fax: 01224 690355
Attention: Managing Director
The Mortgagee: Britoil plc
Burnside Road
Farburn Industrial Estate
Dyce
Aberdeen AB2 OPB
Fax: 0171 496 4630
Attention: Manager, Commercial
17. POWER OF ATTORNEY/FURTHER ASSURANCE
17.1 The Owner hereby irrevocably appoints the Mortgagee as its
attorney for the duration of the Security Period for the
purpose of doing in its name all acts which the Owner
itself could do in relation to the Vessel and its
registration. Without prejudice to the generality of the
foregoing the Mortgagee shall as attorney-in-fact in
addition have the power to sell the Vessel on the same
terms mutatis mutandis as those set out in Clause 7.4
above PROVIDED HOWEVER that such power shall not be
exercisable by or on behalf of the Mortgagee until the
happening of an Event of Default.
17.2 The exercise of such power by or on behalf of the
Mortgagee shall not put any person dealing with the
Mortgage upon any enquiry as to whether any of the
Indebtedness shall have become payable nor shall such
person be in any way affected by notice that any part of
the Indebtedness has not become payable and the exercise
by the Mortgagee of such power shall be conclusive
evidence to such person of the Mortgagee's right to
exercise the same.
17.3 The Owner hereby further undertakes at its own expense
that in the event that this deed or any provision hereof
or any provision of the Mortgagee shall be deemed
invalidated in whole or in part by reason of any present
or future law or any decision of any competent or
authoritative court or if either this deed or the Mortgage
shall be deemed by the Mortgagee for any reason
insufficient to carry out is true intent and purpose from
time to time promptly to sign, seal, execute, deliver and
register or procure the doing, signing, sealing,
execution, delivery and registration at its expense and at
no cost to the Mortgagee of all such other and further
acts assurances and documents whatsoever as in the opinion
of the Mortgagee (acting reasonably) may be required more
effectual to mortgage, charge or assign the Mortgaged
Property and secure the Indebtedness and the performance
of the terms and provisions of this deed and the Mortgage
or perfect the security constituted thereby and the Owner
hereby irrevocably appoints the Mortgagee as its attorney
for the purpose of signing, executing (including as a
deed), perfecting, doing and registering every such
further assurance, document, act or thing as aforesaid for
the duration of the Security Period.
IN WITNESS WHEREOF this deed has been executed as a deed on the day and
year first
above written.
Executed as a Deed by
READING & BATES (CALEDONIA) LIMITED
acting by its authorised attorney
in the presence of:
Executed as a Deed by
BRITOIL plc
acting by its authorised attorney
in the presence of:
===========================================================================
SCHEDULE 1
NOTICE OF ASSIGNMENT OF INSURANCES
(for attachment by way of endorsement to the Policy)
ESV " "
We, [Owner] of [ ] the Owners of the emergency
support vessel " " hereby give notice that by an
assignment dated [ ] 199 and entered into by us with
[Mortgagee] there has been assigned by us to the said
[Mortgagee] as assignees all insurances in respect of the
said vessel including the insurances constituted by the
Policy on which this notice is endorsed.
BY:
TITLE:
============================================================================
SCHEDULE 2
LOSS PAYABLE CLAUSE FOR HULL & WAR RISKS POLICIES
ESV " "
It is noted that by an assignment in writing dated 199 [ ] the
Owner of the above mentioned vessel has assigned absolutely to [
] (hereinafter called the "Mortgagee") all the Owner's
interests in this Policy and all benefits hereof including all claims of
whatsoever nature hereunder.
Claims hereunder payable in respect of an actual or constructive or
agreed or arranged or compromised total loss or requisition of the Vessel
and claims hereunder payable in respect of a major casualty that is to
say any casualty in respect whereof the claim or the aggregate of the
claims exceeds two hundred and fifty thousand United States Dollars (US
$250,000) shall be payable to the Mortgagee.
All other claims, unless and until the Brokers have received notice from
the Mortgagee of a default under the Mortgage, (in which event all claims
under this Policy of Insurance shall be payable direct to the Mortgagee),
shall be released directly for the repair salvage or other charges
involved or, if the Owner has paid such charges, in reimbursement thereof
to the Owner.
=============================================================================
SCHEDULE 3
LOSS PAYABLE CLAUSE FOR PROTECTION AND INDEMNITY
RISK POLICIES
"Payment of any recovery the Owner is entitled to make out of the funds
of the insurer in respect of any liability, costs or expenses incurred by
him shall be made to the Owner or to their order unless and until the
insurer receives notice from [Mortgagee] that the Owner is in default
under a first Mortgage dated , in which event all
recoveries shall thereafter be negotiated and settled by the insurer
and/or the Owner directly with the relevant third party and all sums
shall be applied in satisfaction of the Owners liability thereto provided
always that no liability whatsoever shall attach to the association, its
managers or their agents for failure to comply with the obligations
herein until after the expiry of 2 clear business days from the receipt
of such notice."
EXHIBIT 10.8
PERFORMANCE GUARANTEE
by
READING & BATES CORPORATION
in favour of
BP EXPLORATION OPERATING COMPANY LIMITED
============================================================================
THIS PERFORMANCE GUARANTEE is made the 8TH day of September 1995 and given
BY:
(1) READING & BATES CORPORATION, a company organised under the laws of
Delaware whose principal place of business is at 901 Treadneedle,
Suite 200, Houston, Texas 7707-2902, United States of America ("the
Guarantor");
IN FAVOUR OF
(2) BP EXPLORATION OPERATING COMPANY LIMITED, (registered number 305943)
whose registered office is at Britannic House, 1 Finsbury Circus,
London EC2M 7BA ("the Company").
WHEREAS:
(A) The Company has entered into the Sale and Purchase Agreement with the
Purchaser of even date herewith;
(B) The Purchaser has certain actual and contingent liabilities in terms
of the Sale and Purchase Agreement to make payment of sums to the
Company and to perform certain other obligations in terms thereof;
(C) The Guarantor is the ultimate parent company of the Purchaser and the
Guarantor has agreed (it being in its best commercial interests to do
so) to enter into this Guarantee in respect of the Guaranteed
Obligations.
NOW THIS DEED WITNESSETH as follows:
1. INTERPRETATION
1.1 In this Guarantee, unless otherwise defined or provided for in this
Guarantee, words and expressions shall have the following meanings:-
"Guaranteed Obligations" has the meaning ascribed to it in Clause
2.1;
"the Purchaser" shall mean Reading & Bates (Caledonia) Limited a
company registered in England (number 1591065) whose registered
office is at Harman House, 1 George Sreet, Uxbridge, Middlesex UB8
lQQ;
"the Sale and Purchase Agreement" means the Sale and Purchase
Agreement dated of even date herewith and entered into between the
Company and the Purchaser in respect of the sale and purchase of the
Emergency Support Vessel Iolair;
"Tax" shall be construed so as to include all present and future
taxes, charges, imposts, duties, royalties, levies, deductions,
withholdings or fees of any kind whatsoever, or any amount payable on
account of or as security for any of the foregoing, payable at the
instance of or imposed by statutory, governmental, international,
state, federal, provincial, local or municipal authority, agency,
body or department whatsoever or monetary agency or European
Communities institution, in each case whether in the United Kingdom
or elsewhere, together with any penalties, additions, fines,
surcharges or interest relating thereto, and "Taxes" and "Taxation"
shall be construed accordingly.
1.2 In this Guarantee:
(a) references to Clauses are to be construed as references to the
Clauses of this Guarantee, references to sub-clauses shall
unless otherwise specifically stated be construed as references
to the sub-clauses of the Clause in which the reference appears;
(b) references to this Guarantee (or to any specified provisions of
this Guarantee) or to any other document shall be construed as
references to this Guarantee, that provision or that document as
in force for the time being and as amended or novated or
supplemented in accordance with its terms, or, as the case may
be, with the agreement of the relevant parties;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as including
references to an individual, form or company;
(e) references to any statute or statutory provision include any
statute or statutory provision which amends, extends,
consolidates or replaces the same, or which has been amended,
extended, consolidated or replaced by the same, and shall
include any orders, regulations, instruments or other
subordinate legislation made under the relevant statute;
(f) Clause headings are for ease of reference only and shall not
affect the constuction of this Guarantee.
2. GUARANTEE
2.1 The Guarantor (as a primary obligor and not merely as a surety) at
the request of Purchaser hereby irrevocably and unconditionally
guarantees to the Company :
(a) the due and punctual payment to the Company by the Purchaser of
all amounts which the Purchaser is or shall become obliged to
pay to the Company pursuant to the Sale and Purchase Agreement
to the intent that if and whenever the Purchaser shall default
in providing on the due date any such amount to the Company the
Guarantor shall forthwith on first written demand therefor being
made by the Company for any such amounts unconditionally pay to
the Company the moneys in regard to which default shall have
been made (including interest thereron from the due date of such
payment until payment thereof both before and after any
judgement at the rates due in terms of the Sale and Purchase
Agreement) and otherwise on the terms provided for under the
Sale and Purchase Agreement; and
(b) the due and punctual performance by the Purchaser of all other
terms, covenants, stipulations and obligations contained in the
Sale and Purchase Agreement.
The obligations on the part of the Purchaser under the Sale and
Purchase Agreement to pay such sums and to perform such terms,
covenants, stipulations and obligations are referred to as
"Guaranteed Obligations" in this Guarantee.
2.2 Payment under this Guarantee will (where appropriate) be made in the
currency in which the relevant Guaranteed Obligation shall become
payable in terms of the Sale and Purchase Agreement.
3. CONTINUING AND ADDITIONAL SECURITY
3.1 This Guarantee is a continuing security and shall remain in full
force and effect until all the Guaranteed Obligations have been
discharged or satisfied in full notwithstanding the liquidation or
other incapacity or any change in the constitution of the Purchaser
or of the Guarantor or in the name and style of either of them or any
settlement of account or other matter whatsoever.
3.2 This Guarantee is in addition to and shall not merge with or
otherwise prejudice or affect or be prejudiced by any other right,
remedy, guarantee, indemnity or security and may be enforced without
first having recourse to the same or any other bill, note, mortgage,
charge, pledge or lien now or hereafter held by or available to the
Company.
4. MATTERS NOT TO REDUCE THE GUARANTOR'S LIABILITY
4.1 If any purported obligation or liability of the Purchaser under the
Sale and Purchase Ageement which, if valid, would have been the
subject of this Guarantee is not or ceases to be valid or enforceable
on any ground whatsoever (whether or not known to the Company)
(including, but not limited to, any defect in or want of powers of
the Purchaser or irregular exercise thereof or lack of authority by
any person apparently authorised to act on behalf of the Purchaser or
any legal or other limitation (whether under the Limitation Act 1980
or otherwise), disability, incapacity or any change in the
constitution of or any amalgamation, reconstruction or liquidation of
the Purchaser), the Guarantor shall nevertheless be liable in respect
of that purported obligation or liability as if the same were fully
valid and enforceable and as if the Guarantor were the principal
debtor in respect thereof. The Guarantor hereby agrees to keep the
Company fully indemnified in accordance with the terms of this
Guarantee in the relevant currency as specified in Clause 2.2 or in
the case of a non-monetary obligation or liability, in British Pounds
Sterling against all damages, losses, costs and expenses arising from
any failure of the Purchaser to carry out any such purported
obligation or liability.
4.2 The liability of the Guarantor shall not be affected nor shall this
Guarantee be discharged or diminished by reason of:
(a) any time being given by the Company to the Purchaser or to any
surety, or by any other indulgence or concession granted by the
Company to the Purchaser or to any surety in respect of (or any
variation or waiver of) any of the Guaranteed Obligations or any
obligations of any surety (whether the same be made with the
Guarantor's consent or not); or
(b) the taking, holding, varying, non-enforcement or release by the
Company of any present or future guarantee, indemnity or
security; or
(c) any present or future guarantee, indemnity or security being or
becoming wholly or partially void, voidable or unenforceable on
any ground whatsoever, or
(d) any act or omission which would not have discharged or affected
the liability of the Guarantor had it been a principal debtor
instead of guarantor or by anything done or omitted which but
for the provision might operate to exonerate the Guarantor; or
(e) any other act or thing whatsoever done or omitted or neglected
to be done by Company in relation to the Guaranteed Obligations.
5. NO COMPETITION
Until all the Guaranteed Obligations have been paid, discharged or
satisfied in full, the Guarantor waives all rights of subrogation and
indemnity against the Purchaser in respect of Guaranteed Obligations
and agrees not to share in any security held or monies received by
the Company on account of such liabilities or to claim or prove in
competition with the Company in the liquidation of the Purchaser (or
its equivalent in any relevant jurisdiction) in respect of any monies
paid by the Guarantor to the Company under this Guarantee. If the
Guarantor receives any payment or other benefit or exercises any set-
off or counterclaim or otherwise acts in breach of this Clause,
anything so received and any benefit derived directly or indirectly
by the Guarantor therefrom shall be held in trust for the Company.
6. DISCHARGE TO BE CONDITIONAL
Any release, dischage or settlement between the Guarantor and the
Company shall be conditional upon no security, disposition or payment
to the Company by the Purchaser or any other person in respect of the
Guaranteed Obligations being void, set aside or ordered to be
refunded pursuant to any enactment or law in relation to bankruptcy,
liquidation or insolvency (or its equivalent in any relevant
jurisdiction) or for any reason whatever, and if such condition shall
not be fulffied the Company shall be entitled to enforce this
Guarantee as if such release, discharge or settlement had not
occurred and any such payment had not been made.
7. ENFORCEMENT
7.1 The Company shall not be obliged before taking steps to enforce this
Guarantee:
(a) to take any action or obtain judgement in any court against the
purchaser or any other person;
(b) to make or file any claim in any bankruptcy or liquidation (or
its equivalent in an relevant jurisdiction) of the Purchaser or
of any other person;
(c) to make, enforce or seek to enforce any claim against the
Purchaser or any other person under any security or other
document, agreement or arrangement; or
(d) to enforce against and/or realise (or seek so to do) any
security that it may have in respect of all or any part of the
Guaranteed Obligations.
8 PAYMENT AND WITHHOLDINGS
8.1 All sums due and payable by the Guarantor under this Guarantee shall
be made in full without set-off or counterclaim and free and clear of
and (subject as provided in Clause 8.2) without deduction for or on
account of any future or present Taxes.
8.2 If:
(a) the Guarantor is required by any law to make any deduction or
withholding from any sum payable by the Guarantor to the Company
hereunder, or
(b) the Company is required by law to make any payment on account of
Tax (other than Tax on its overall net income) or otherwise on
or in relation to any amount received or receivable by the
Company hereunder;
then the sum payable by the Guarantor in respect of which such
deduction, withholding or payment is required to be made shall be
increased to the extent necessary to ensure that, after the making of
such deduction, withholding or payment (and after taking account of
any deduction, withholding or payment which is required to be made as
a result of their increase) the Company receives and retains a net
sum equal to the sum which it would have received and so regained had
no such deduction, withholding or payment had been made.
9. WAIVER
No failure on the part of the Company to exercise, or delay on its
part in exercising, any of its rights, powers and remedies provided
by this Guarantee or by law shall operate as a waiver thereof, nor
shall any single or partial exercise of any such rights, powers and
remedies preclude any further or other exercise of such rights,
powers, and remedies.
10. INDEMNITY
The Guarantor hereby agrees to indemnify (save insofar as otherwise
indemnified hereunder) the Company on demand against all losses,
actions, claims, costs, charges, expenses and liabilities incurred or
sustained by the Company in any enforcement of this Guarantee or
occasioned by any breach by the Guarantor of any of its covenants or
obligations to the Company under this Guarantee.
11. PROVISIONS SEVERAGLE
Every provision contained in this Guarantee shall be severable and
distinct from every other such provision and if at any time any one
or more of such provisions is or becomes invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining such provisions shall not in any way be affected thereby.
12. REPRESENTATIONS AND WARRANTIES
12.1 The Guarantor hereby represents and warrants to the Company that:
(a) the Guarantor is a company incorporated under the laws of the
State Delaware, United States of America and possesses the
capacity to sue and be sued in its own name and has the power to
carry on its business and to own its property and other assets;
(b) the Guarantor has power to execute, deliver and perform its
obligations under this Guarantee and to carry out the
transactions contemplated hereby, and all necessary corporate,
shareholder and other action has been taken to authorise the
execution, delivery and performance of the same;
(c) the obligations of the Guarantor under this Guarantee constitute
its legal, valid and binding obligations and are in full force
and effect in accordance with their terms;
(d) the execution, delivery and performance by the Guarantor of this
Guarantee does not and will not:
(i) contravene any applicable law or regulation or any order
of any competent governmental or other official
authority, body or agency any judgement, order or decree
of any court having jurisdiction over the Guarantor;
(ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or
other instrument to which the Guarantor is a party or any
licence or other authorisation to which the Guarantor is
subject or by which the Guarantor or any of its property
is bound; or
(iii) contravene or conflict with the provision of the
Guarantor's Restated Certificate of Incorporation and By-
laws.
13. AMENDMENTS
No amendments or waiver of any provision of this Guarantee and no
consent to any departures by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed or approved
in writing by the Company, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
14. CONTINUATION OF GUARANTEE
14.1 Subject to Clause 14.2, this Guarantee shall remain in full force and
effect notwithstanding the termination of the Sale and Purchase
Agreement or any amendments or variations from time to time thereto.
14.2 This Guarantee may be terminated by the Guarantor serving a notice to
such effect on the Company at any time after the fulfilment by the
Purchaser of the Guaranteed Obligations.
15. EVIDENCE
A certificate by an officer of the Company:
(i) as to the amount for the time being due to the Company from
the Purchaser, and
(ii) as to any sums payable to the Company hereunder;
shall (save in the case of manifest error) be conclusive and
binding upon the Guarantor for all purposes.
16. NOTICES
16.1 A demand or notice hereunder shall be made in writing and may be
made by letter, recorded delivery or facsimile.
16.2 Any such demand or notice shall (unless the Guarantor or the
Company has, by seven (7) days' written notice received by Company
cr the Guarantor respectively as the case may be, specified another
address) be delivered by hand or shall be sent by letter, delivery,
telex or facsimile addressed to the Guarantor or the Company as the
case may be at the address set out below:-
Reading & Bates Corporation
901 Threadneedle
Suite 200
Houston
Texas 77079
USA
Attention: President
Facsimile: 001-713 496 0285
BP Exploration Operating Company Limited
Britannic House
I Finsbury Circus
London EC2MM 7BA
Attention: Manager, Commercial
Facsimile: 0171 496 4630
16.3 All notices delivered by recorded delivery or hand or sent by telex
or facsimile shall be effective, when received at the recipient's
address as aforesaid.
16.4 Any notice given by telefax or facsimile transmission shall (unless
already acknowledged) be subsequently confirmed by letter sent by
recorded delivery or by hand but without prejudice to the
of the validity of the original notice if received.
17. GOVERNING LAW
17.1 Guarantee shall be governed by and construed in accordance with
English law.
17.2 To the extent that (if at all) the Guarantor may in any
jurisdiction in which proceedings may at any time be taken for the
enforcement of this Guarantee claim for itself or its assets
immunity from suit, execution, attachment (whether in aid of
execution, before judgement or otherwise) or other legal process
and to the extent (if at all) that in any such jurisdiction there
may be attributed to the Guarantor or its assets any such immunity
(whether or not claimed), the Guarantor irrevocably agrees not to
claim and irrvocably and unconditionally waives such immunity to
the fullest extent permitted by the laws of such jurisdiction and
consents in respect of each jurisdiction in which proceedings may
at any time be taken for enforcement of this Guarantee to the
enforcement or execution or any order or judgemnt that may be made
or given against it in any such proceedings.
IN WITNESS WHEREOF the Guarantor has executed and delivered this Guarantee
as a deed the day and year first above written.
EXECUTED and DELIVERED as a DEED BY
READING & BATES CORPORATION
acting by its authorised Attorney
in the presence of:-
EXHIBIT 10.9
PERFORMANCE GUARANTEE
by
READING & BATES CORPORATION
in favour of
BRITOIL plc
=============================================================================
THIS PERFORMANCE GUARANTEE is made the 8th day of September 1995 and
given BY:
(1) READING & BATES CORPORATION, a company organised under the laws of
Delaware whose principal place of business is at 901 Threadneedle,
Suite 200, Houston, Texas 7707-2902, United States of America ("the
Guarantor");
IN FAVOUR OF
(2) BRITOIL plc, (registered number 77750) whose registered office is at
Burnside Road, Farburn Industrial Estate, Dyce, Aberdeen AB2 OPB
("the Company").
WHEREAS:
(A) The Company has entered into the Services Agreements with the
Contractor of even date herewith,
(B) The Contractor has certain actual and contingent liabilities in
terms of the Services Agreements to make payment of sums to the
Company and to perform certain other obligations in terms thereof;
(C) The Guarantor is the ultimate parent company of the Contractor and
the Guarantor has agreed (it being in its best commercial interests
to do so) to enter into this Guarantee in respect of the Guaranteed
Obligations.
NOW THIS DEED WITNESSETH as follows:
1. INTERPRETATION
1.1 In this Guarantee, unless otherwise defined or provided for in this
Guarantee, words and expressions shall have the following meanings:-
"Guaranteed Obligations" has the meaning ascribed to it in Clause
2.1;
"the Contractor" shall mean Reading & Bates (Caledonia) Limited a
company registered in England (number 1591065) whose registered
office is at Harman House, 1 George Street, Uxbridge, Middlesex UB8
lQQ;
"the Initial Services Agreement" means the initial Services
Agreement (number 101237) between the Company and the Contractor
dated of even date herewith in respect of the provision of
construction support vessel services for Foinaven Development to the
Company as the same shall from time to time be amended;
"the Long Term Services Agreement" means the Heads of Agreement for
the provision of vessel services dated of even date herewith between
the Company, the Contractor and the Guarantor and the agreement
between the Company, the Contractor and the Guarantor to be entered
into pursuant to the said Heads of Agreement in replacement thereof,
as the same shall from time to time be amended;
"the Services Agreements" means the Initial Services Agreement and
the Long Term Services Agreement;
"Tax" shall be construed so as to include all present and future
taxes, charges, imposts, duties, royalties, levies, deductions,
withholdings or fees of any kind whatsoever, or any amount payable
on account of or as security for any of the foregoing, payable at the
instance of or imposed by statutory, governmental, international,
state, federal, provincial, local or municipal authority, agency,
body or department whatsoever or monetary agency or European
Communities institution, in each case whether in the United Kmgdom
or elsewhere, together with any penalties, additions, fines,
surcharges or interest relating thereto, and "Taxes" and "Taxation"
shall be construed accordingly.
1.2 In this Guarantee:
(a) references to Clauses are to be construed as references to the
Clauses of this Guarantee, references to sub-clauses shall
unless otherwise specifically stated be construed as references
to the sub-clauses of the Clause in which the reference appears;
(b) references to this Guarantee (or to any specified provisions of
this Guarantee) or to any other document shall be construed as
references to this Guarantee, that provision or that document as
in force for the time being and as amended or novated or
supplemented in accordance with its terms, or, as the case may
be, with the agreement of the relevant parties;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as including
references to an individual, form or company;
(e) references to any statute or statutory provision include any
statute or statutory provision which amends, extends,
consolidates or replaces the same, or which has been amended,
extended, consolidated or replaced by the same, and shall
include any orders, regulations, instruments or other
subordinate legislation made under the relevant statute;
(f) Clause headings are for ease of reference only and shall not
affect the constuction of this Guarantee.
2. GUARANTEE
2.1 The Guarantor (as a primary obligor and not merely as a surety) at
the request of the Contractor hereby irrevocably and unconditionally
guarantees to the Company:
(a) the due and punctual payment to the Company by the Contractor
of all amounts which the Contractor is or shall become obliged
to pay to the Company pursuant to the Services Agreements to
the intent that if and whenever the Contractor shall default in
providing on the due date any such amount to the Company the
Guarantor shall forthwith on first written demand therefor being
made by the Company for any such amounts unconditionally pay to
the Company the moneys in regard to which default shall have
been made (including interest thereon from the due date of such
payment until payment thereof both before and after any
judgement at the rates due in terms of the Services Agreements)
and otherwise on the terms provided for under the Services
Agreements: Provided that the maximum liability of the
Guarantor under this Guarantee in relation to the payment of
liquidated damages in terms of:
(i) Clause 32 of the Initial Services Agreement shall be
restricted to an aggregate of five hundred thousand US
Dollars ($500,000); or
(ii) following termination of the Initial Services Agreement
Clause 15 of the Long Term Services Agreement (and the
equivalent clause in the agreement to follow thereon)
shall be restricted to an aggregate of three million US
Dollars ($3,000,000); and
(b) the due and punctual performance by the Contractor of all other
terms, covenants, stipulations and obligations contained in the
Services Agreements but only to the extent that the liquidated
damages referred to in Clause 2. 1 (a) above have not been made
to the Company by the Guarantor.
The obligations on the part of the Contractor under the Services
Agreements to pay such sums and to perform such terms, covenants,
stipulations and obligations are referred to as "Guaranteed
Obligations" in this Guarantee.
2.2 Payment under this Guarantee will (where appropriate) be made in the
currency in which the relevant Guaranteed Obligation shall become
payable in terms of the Services Agreements.
3. CONTINUING AND ADDITIONAL SECURITY
3.1 This Guarantee is a continuing security and shall remain in full
force and effect until all the Guaranteed Obligations have been
discharged or satisfied in full notwithstanding the liquidation or
other incapacity or any change in the constitution of the Contractor
or of the Guarantor or in the name and style of either of them or
any settlement of account or other matter whatsoever.
3.2 This Guarantee is in addition to and shall not merge with or
otherwise prejudice or affect or be prejudiced by any other right,
remedy, guarantee, indemnity or security and may be enforced without
first having recourse to the same or any other bill, note, mortgage,
charge, pledge or lien now or hereafter held by or available to the
Company.
4. MATTERS NOT TO REDUCE THE GUARANTOR'S LIABILITY
4.1 If any purported obligation or liability of the Contractor under the
Service Agreements which, if valid, would have been the subject of
this Guarantee is not or ceases to be valid or enforceable on any
ground whatsoever (whether or not known to the Company) (including,
but not limited to, any defect in or want of powers of the
Contractor or irregular exercise thereof or lack of authority by any
person apparently authorised to act on behalf of the Contractor or
any legal or other limitation (whether under the Limitation Act 1980
or otherwise), disability, incapacity or any change in the
constitution of or any amalgamation, reconstruction or liquidation
of the Contractor), the Guarantor shall nevertheless be liable in
respect of that purported obligation or liability as if the same
were fully valid and enforceable and as if the Guarantor were the
principal debtor in respect thereof. The Guarantor hereby agrees to
keep the Company fully indemnified in accordance with the terms of
this Guarantee in the relevant currency as specified in Clause 2.2
or in the case of a non-monetary obligation or liability, in British
Pounds Sterling against all damages, losses, costs and expenses
arising from any failure of the Contractor to carry out any such
purported obligation or liability save in respect of the liquidated
damages referred to in Clause 2.1 (a) above which shall be payable
in US Dollars.
4.2 The liability of the Guarantor shall not be affected nor shall this
Guarantee be discharged or diminished by reason of:
(a) any time being given by the Company to the Contractor or to any
surety, or by any other indulgence or concession granted by the
Company to the Contractor or to any surety in respect of (or
any variation or waiver of) any of the Guaranteed Obligations
or any obligations of any surety (whether the same be made with
the Guarantor's consent or not); or
(b) the taking, holding, varying, non-enforcement or release by the
Company of any present or future guarantee, or security; or
(c) any present or future guarantee, indemnity or security being or
becoming wholly or partially void, voidable or unenforceable on
any ground whatsoever,
or
(d) any act or omission which would not have discharged or affected
the liability of the Guarantor had it been a principal debtor
instead of guarantor or by anything done or omitted which but
for the provision might operate to exonerate the Guarantor; or
(e) any other act or thing whatsoever done or omitted or neglected
to be done by the Company in relation to the Guaranteed
Obligations.
5. NO COMPETITION
Until all the Guaranteed Obligations have been paid, discharged or
satisfied in full, the Guarantor waives all rights of subrogation
and indemnity against the Contractor in respect of Guaranteed
Obligations and agrees not to share in any security held or monies
received by the Company on account of such liabilities or to claim
or prove in competition with the Company in the liquidation of the
Contractor (or its equivalent in any relevant jurisdiction) in
respect of any monies paid by the Guarantor to the Company under
this Guarantee. If the Guarantor receives any payment or other
benefit or exercises any set-off or counterclaim or otherwise acts
in breach of this Clause, anything so received and any benefit
derived directly or indirectly by the Guarantor therefrom shall be
held in trust for the Company.
6. DISCHARGE TO BE CONFIDENTIAL
Any release, discharge or settlement between the Guarantor and the
Company shall be conditional upon no security, disposition or
payment to the Company by the Contractor or any other person in
respect of the Guaranteed Obligations being void, set aside or
ordered to be refunded pursuant to any enactment or law in relation
to bankruptcy, liquidation or insolvency (or its equivalent in any
relevant jurisdiction) or for any reason whatever, and if such
condition shall not be fulfilled the Company shall be entitled to
enforce this Guarantee as if such release, discharge or settlement
had not occurred and any such payment had not been made.
7. ENFORCEMENT
7.1 The Company shall not be obliged before taking steps to enforce this
Guarantee:
(a) to take any action or obtain judgement in any court against the
Contractor or any other person;
(b) to make or file any claim in any bankruptcy or liquidation (or
its equivalent in an relevant jurisdiction) of the Contractor
or of any other person;
(c) to make, enforce or seek to enforce any claim against the
Contractor or any other person under any security or other
document, agreement or arrangement;
or
(d) to enforce against and/or realise (or seek so to do) any
security that it may have in respect of all or any part of the
Guaranteed Obligations.
8. PAYMENT AND WITHHOLDINGS
8.1 All sums due and payable by the Guarantor under this Guarantee shall
be made in full without set-off or counterclaim and free and clear
of and (subject as provided in Clause 8.2) without deduction for or
on account of any future or present Taxes.
8.2 If:
(a) the Guarantor is required by any law to make any deduction or
withholding from any sum payable by the Guarantor to the
Company hereunder, or
(b) the Company is required by law to make any payment on account
of Tax (other than Tax on its overall net income) or otherwise
on or in relation to any amount received or receivable by the
Company hereunder;
then the sum payable by the Guarantor in respect of which such
deduction, withholding or payment is required to be made shall be
increased to the extent necessary to ensure that, after the making
of such deduction, withholding or payment (and after taking account
of any deduction, withholding or payment which is required to be
made as a result of their increase) the Company receives and retains
a net sum equal to the sum which it would have received and so
regained had no such deduction, withholding or payment had been
made.
9. WAIVER
No failure on the part of the Company to exercise, or delay on its
part in exercising any of its rights, powers and remedies provided
by this Guarantee or by law shall operate as a waiver thereof, nor
shall any single or partial exercise of any such rights, powers and
remedies preclude any further or other exercise of such rights,
powers and remedies.
10. INDEMNITY
The Guarantor hereby agrees to indemnify (save insofar as otherwise
indemnified hereunder) the Company on demand against all losses,
actions, claims, costs, charges, expenses and liabilities incurred
or sustained by the Company in any enforcement of this Guarantee or
occasioned by any breach by the Guarantor of any of its covenants or
obligations to the Company under this Guarantee.
11. PROVISIONS SEVERABLE
Every provision contained in this Guarantee shall be severable
and distinct from every other such provision and if at any time any
one or more of such provisions is or becomes invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining such provisions shall not in any way be affected thereby.
12. REPRESENTATIONS AND WARRANTIES
12.1 The Guarantor hereby represents and warrants to the Company that:
(a) the Guarantor is a company incorporated under the laws of the
State of Delaware, United States of America and possesses the
capacity to sue and be sued in its own name and has the power
to carry on its business and to own its property and other
assets;
(b) the Guarantor has power to execute, deliver and perform its
obligations under this Guarantee and to carry out the
transactions contemplated hereby, and all necessary corporate,
shareholder and other action has been taken to authorise the
execution, delivery and performance of the same;
(c) the obligations of the Guarantor under this Guarantee
constitute its legal, valid and binding obligations and are in
full force and effect in accordance with their terms;
(d) the execution, delivery and performance by the Guarantor of
this Guarantee does not and will not:
(i) contravene any applicable law or regulation or any order of
any competent governmental or other official authority,
body or agency or any judgement, order or decree of any
court having jurisdiction over the Guarantor;
(ii) conflict with, or result in any breach of any of the terms
of, or constitute a default under, any agreement or other
instrument to which the Guarantor is a party or any licence
or other authorisation to which the Guarantor is subject or
by which the Guarantor or any of its property is bound; or
(iii) contravene or conflict with the provision of the
Guarantor's Restated Certificate of Incorporation and By-
laws.
13. AMENDMENTS
No amendments or waiver of any provision of this Guarantee and no
consent to any departures by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed or approved
in writing by the Company, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
14. CONTINUATION OF GUARANTEE
14.1 Subject to Clause 14.2, this Guarantee shall remain in full force
and effect notwithstanding the termination of the Services
Agreements or any amendments or variations from time to time
thereto.
14.2 This Guarantee may be terminated by the Guarantor serving a
notice to such effect on the Company at any time after the
fulfilment by the Contractor of the Guaranteed Obligations.
15. EVIDENCE
A certificate by an officer of the Company:
(i) as to the amount for the time being due to the Company from the
Contractor;
and
(ii) as to any sums payable to the Company hereunder;
shall (save in the case of manifest error) be conclusive and binding
upon the Guarantor for all purposes.
16. NOTICES
16.1 A demand or notice hereunder shall be made in writing and may be
made by letter, recorded delivery or facsimile.
16.2 Any such demand or notice shall (unless the Guarantor or the Company
has, by seven (7) days' written notice received by the Company or
the Guarantor respectively as the case may be, specified another
address) be delivered by hand or shall be sent by letter, recorded
delivery, telex or facsimile addressed to the Guarantor or the
Company as the case may be at the address set out below:-
Reading & Bates Corporation
901 Threadneedle
Suite 200
Houston
Texas 77079
USA
Attention: President
Facsimile: 001-713 496 0285
Britoil plc
Burnside Road
Farburn Industrial Estate
Dyce
Aberdeen AB2 0PB
Attention: Manager, Commercial
Facsimile: 0171 496 4630
16.3 All notices delivered by recorded delivery or hand or sent by telex
or facsimile shall be effective when received at the recipient's
address as aforesaid.
16.4 Any notice given by telefax or facsimile transmission shall (unless
already acknowledged) be subsequently confirmed by letter sent by
recorded delivery or by hand but without prejudice to the validity
of the original notice if received.
17. GOVERNING LAW
17.1 This Guarantee shall be governed by and construed in accordance with
English law.
17.2 To the extent that (if at all) the Guarantor may in any jurisdiction
in which proceedings may at any time be taken for the enforcement of
this Guarantee claim for itself or its assets immunity from suit,
execution, attachment (whether in aid of execution, before judgement
or otherwise) or other legal process and to the extent (if at all)
that in any such jurisdiction there may be attributed to the
Guarantor or its assets any such immunity (whether or not claimed),
the Guarantor irrevocably agrees not to claim and irrevocably and
unconditionally waives such immunity to the fullest extent permitted
by the laws of such jurisdiction and consents in respect of each
jurisdiction in which proceedings may at any time be taken for
enforcement of this Guarantee to the enforcement or execution or any
order or judgement that may be made or given against it in any such
proceedings.
IN WITNESS WHEREOF the Guarantor has executed and delivered this
Guarantee as a deed the day and year first above wntten.
EXECUTED and DELIVERED as a DEED BY
READING & BATES CORPORATION
acting by its authorised Attorney
in the presence of:-
EXHIBIT 10.10
BP Exploration Operating Company Limited
Britoil plc
Farburn industrial Estate,
Dyce.
Aberdeen A62 OPS
Tel: (01224) 832000
Fax: (01224) 725273
Telex: 739831
Direct Line: (01224) 832602
Direct Fax: (01224) 833933
Reference:
MAN/PRO/35.
8th September 1995
CONTRACT AGREEMENT to:-
CONTRACT NO. 101237
ATLANTIC FRONTIER PROGRAMME
PROVISION OF CONSTRUCTION SUPPORT VESSEL
SERVICES FOR FOINAVEN DEVELOPMENT
INITIAL SERVICES AGREEMENT
This Contract made between Britoil Public Limited Company (hereinafter
referred to as "Britoil") acting on behalf of itself and the other Co-
venturers who currently have a beneficial interest in the Foinaven Field
and Reading & Bates (Caledonia) Limited (hereinafter referred to as the
"Contractor"), records the terms and conditions under which the
Contractor shall provide the necessary vessel, equipment, marine crew
complEment and vessel maintenance and shore side management team to
support construction activities for the Foinaven Development
(hereinafter collectively referred t as the "Services") all as more
particularly described elsewhere in the Contract.
It is hereby agreed as follows:-
1. CAPACITY OF BRITOIL
1.1 Britoil enters into this Contract as agent or trustee for and on
behalf of itself and the other Co-venturers but notwithstanding
this fact:
(i) The Contractor agrees to look only to Britoil for the due
performance of the Contract and nothing herein contained
shall impose any liability upon, or entitle the Contractor
to commence any proceedings against any Co-venturer other
than Britoil.
(ii) Britoil and only Britoil shall be entitled to enforce this
Contract on behalf of all Co-venturers as well as for
itself and for this purpose Britoil may commence
proceedings in its own name to enforce all obligations and
liabilities of the Contractor and to make any claim which
any of the Co-venturers may have against the Contractor in
relation to or arising out of this Contract, but subject to
the express defences, limitations and exclusions of
liability given to the Contractor in this Contract.
Britoil shall indemnify and hold harmless the Contractor
against any actions taken by Co-Venturers contrary to the
provisions of the sub-clause.
1.2 Wherever in this Contract rights, benefits and/or indemnities
are expressed in favour of Britoil, or given by Britoil, such
rights, benefits and/or indemnities shall apply equally to the
other Co-venturers, Affiliates and their respective officers,
directors, employees and agents.
1.3 Insofar as the Contractor enters into this Contract as agent or
trustee for its Sub-Contractors, Affiliates and their
respective officers, directors, employers and agents, wherever
in this Contract rights, benefits and/or indemnities are
expressed in favour of the Contractor, or given by the
Contractor, such rights, benefits and/or indemnities shall
apply equally to its Sub-Contractors, Affiliates and their
respective officers, directors, employees and agents.
1.4 Wherever in this Contract either party indemnities the other
party for loss or damage to its property, or for injury or
death to its personnel, such indemnity shall only apply to
property or personnel associated with this Contract.
2. CONTRACT DOCUMENTS
2.1 The documents listed below shall be deemed to form and to be
read and to construed as parts of the Contract.
This Contract Agreement together with
- Section "A": Scope of service
- Section "B": Remuneration
- Section "C": Conditions of Contract, with
- Attachment No. 1- Health, Safety, Welfare and Working
Environment
- Attachment No. 2- Contractor's Personnel
2.2 The terms and conditions contained within the above several
documents constitute the entire agreement between the parties
and supersede all previous communications, representations, or
agreements, either oral or written, between the parties hereto
with respect to the subject matter hereof, and no agreements or
understanding varying or extending the same will be binding
upon either party hereto unless in writing, signed by a duly
authorised officer or representative thereof in which writing
this Contract shall be specifically referred to.
2.3 The several documents forming this Contract are to be taken as
mutually explanatory of one another, but in the case on
ability, conflict or discrepancy, the documents shall be
considered in the order of precedence as listed in 2.1
3. DURATION
The Contract shall commence immediately following acquisition of
ownership by the Contractor of the nominated Vessel (the
"Commencement Date" currently anticipated to be on or about 7th
September 1995) and shall continue thereafter for a period of not
less than fifty (50) continuous calendar days and not more than one
hundred (100) continuous calendar days. Such period to be agreed
between Britoil and the Contractor on determination of the exact
scope of the Services.
4. AGREEMENT AND ACCEPTANCE
The Parties hereto accept the terms and conditions contained herein
and agree to be bound by them. The Contract is executed below by
duly authorized representative of the parties.
For and on behalf of Britoil Public Limited Company
___________________________(Signature)
___________________________(Date)
For and on behalf of Reading & Bates (Caledonia) Limited
___________________________(Signature)
_________________________(Date)
============================================================================
CONTRACT NO. 101237
ATLANTIC FRONTIER PROGRAMME
PROVISION OF CONSTRUCTION SUPPORT VESSEL,
SERVICES FOR FOINAVEN DEVELOPMENT
SECTION "A"
SCOPE OF SERVICES
1. Description
Britoil requires the Contractor to provide construction support
vessel services from which others will undertake subsea work in the
Foinaven Field, West o Shetland. The subsea construction and hook-up
work in the Foinaven Field will include the activities listed below.
The subsea activities will be undertaken by the AFP Foinaven wells
and subsea Alliances. The Contractor will be required to work
closely with these Alliances.
The Contractor will provide the nominated Vessel (and other
Contractors Equipment) for each Alliance to undertake the activities
below. The precise relationship between, and responsibilities of the
Contractor and the various Alliances are yet to be agreed.
2. 1995 Activities
The activities in support of which the Contractor shall provide the
Services include, but are not necessarily limited to:-
Flowline Termination Assembly Installation &
Flowline Pigging and Testing
The vessel will be fitted with handling equipment to allow
terminations of existing Foinaven subsea flowlines to be recovered to
surface, the flowline termination assembly (FTA) to be installed or
replaced and the flowline to be relaid.
The vessel will mobilise to Foinaven field around 7th September, 1995
to install or replace up to 14 FTA'S.
Subsea pigging and testing of these flowlines will also be undertaken
from the vessel. Pigs will be launched and recovered by ROV.
This work is anticipated to continue through to October.
DC1 Manifold Installation
On completion of above, the vessel will be used to transport to
location and install the Foinaven Drill Centre 1 manifold. It will
be installed via moonpool, using purpose designed and installed
lifting frame.
Work is anticipated to take 12 days, in October 1995.
=============================================================================
CONTRACT NO. 101237
ATLANTIC FRONTIER PROGRAMME
PROVISION OF CONSTRUCTION SUPPORT VESSEL
SERVICES FOR FOINAVEN DEVELOPMENT
SECTION "B"
REMUNERATION
In full consideration of the satisfactory provision of the Services by
the Contractor, Britoil shall pay the Contractor as follows:-
1. The daily rate payable for the period of the first 100 continuous
days of Service from the Commencement Date shall be UK L20,000 per
day and shall continue until the Vessel is returned to Invergordon
at the end of such period.
2. Beyond the 100 day period, any further Services undertaken by the
Contractor with the unconverted vessel shall be charged to Britoil
at the rate of L25,000 per day.
Notes
(i) See Clause 18 of the Conditions of Contract (Section "C") for
provisions relative to remuneration in the event of non-
performance by the Contractor.
(ii) Any days when the Contractor is unable to perform for the reasons
set out in said Clause 18 shall not be counted within the first
100 day period.
=============================================================================
CONTRACT NO. 101237
ATLANTIC FRONTIER PROGRAMME
PROVISION OF CONSTRUCTION SUPPORT VESSEL
SERVICES FOR FOINAVEN DEVELOPMENT
SECTION "C"
CONDITIONS OF CONTRACT
INDEX
CLAUSE TITLE
NO.
1. DEFINITIONS
2. BRITOIL'S REPRESENTATIVE
3. CONTRACTOR'S REPRESENTATIVE
4. CONTRACTOR'S EQUIPMENT
5. CONTRACTOR'S PERSONNEL
6. BRITOIL'S PERSONNEL
7. HEALTH, SAFETY, WELFARE AND WORKING ENVIRONMENT
8. EQUIPMENT SUPPLIED BY Britoil
9. INFRINGEMENT
10. LIABILITY AND INDEMNITY
11. INSURANCE
12. SUNKEN EQUIPMENT AND MATERIALS
13. INVOICING AND PAYMENT
14. AUDIT
15. ASSIGNMENT AND SUB-CONTRACTING
16. TERMINATION WITHOUT CAUSE
17. TERMINATION WITH CAUSE
18. NON-PERFORMANCE BY CONTRACTOR
19. SUSPENSION
20. TAX INFORMATION AND INDEMNITY
21. INDEPENDENT CONTRACTOR
22. CONFIDENTIAL INFORMATION
23. PUBLICITY
24. COMPLIANCE WITH LAWS AND REGULATIONS
25. CONDUCT OF CONTRACTOR
26. FREEDOM FROM LIENS
27. RECORDS AND REPORTS
28. INSPECTION OF SITE
29. LIQUIDATION OR INSOLVENCY
30. FORCE MAJEURE
31. NOTICES
32. LIQUIDATED DAMAGES
33. APPLICABLE LAW AND LANGUAGE
Attachment No. 1 - Health, Safety, Welfare and Working Environment
Attachment No. 2 - Contractor's Personnel
Attachment No. 3 - Form of Mutual Hold Harmless Arrangement
In this Contract the following words and expressions shall have the
meanings assigned to them, except where the context otherwise requires.
1. DEFINITIONS
1.1 "Affiliate" as applied to Britoil shall mean and include The
British Petroleum Company plc and any company which is a
subsidiary of The British Petroleum Company plc within the
meaning of the Companies Act 1985.
1.2 "Affiliate" as applied to the Contractor or any Sub-contractor
shall mean and include the Contractor's or any Sub-contractor's
ultimate holding company and any company or corporation which is
a direct or indirect subsidiary of the latter.
1.3 "Attachment" shall mean the attachments hereto marked 1, 2 and 3
of this Section "C", which form part hereof.
1.4 "Britoil" shall mean Britoil Public Limited Company having a
place of business at Burnside Road, Farburn Industrial Estate,
Dyce, Aberdeen, AB2 OPB and shall include Britoil Public Limited
Company's legal personal representatives, successors and
permitted assigns.
1.5 "Britoil's Equipment" shall mean any Britoil owned equipment,
materials and supplies that may be provided by Britoil under the
Contract.
1.6 "Britoil Personnel" shall mean the persons employed by Britoil,
its Co-venturers or its or their Affiliates in connection with
the Services.
1.7 "Britoil's Representative" shall mean the person or persons
appointed as such by Britoil (and notified in writing to the
Contractor) to perform the functions set out in Clause 2 hereof
and shall include any other person or persons notified in writing
as deputy at the Site.
1.8 "Contractor" shall mean Reading & Bates (Caledonia) Limited
having its registered office at Harman House, 1 George Street,
Uxbridge, Middlesex UB8 1QQ and shall include Reading & Bates
(Caledonia) Limited legal personal representatives, successors
and permitted assigns (for avoidance of doubt, Contractor's
Equipment does not include the provision of equipment of third
services provided by, or for the account of Britoil).
1.9 "Contractor's Equipment" shall mean the Vessel (as defined below)
and all other items of plant, equipment, miscellaneous materials
and consumables provided by the Contractor and where appropriate
its Sub-contractors in connection with the Services.
1.10 "Contractors Personnel" shall mean the persons employed by the
Contractor, and where appropriate, Sub-contractors or its or
their Affiliates, in connection with the Services.
1.11 "Contractor's Representative" shall mean the person appointed as
such by the Contractor and notified in writing to Britoil to
perform the functions set out in Clause 3 hereof and shall
include any other person or persons notified in writing as a
deputy.
1.12 "Co-venturers" shall mean each of a:
Britoil Public Limited Company, a company incorporated in
Scotland whose registered office is at Burnside Road, Farburn
Industrial Estate, Dyce, Aberdeen, AB2 OPB ("Britoil");
Britoil Public Limited Company, a company incorporated in England
whose registered office is at Britannic House, I Finsbury Circus,
London EC2M 7BA ("Britoil");
Shell UK Limited, a company incorporated in England whose
registered office is at Shell-Mex House, Strand, London, WC2R ODX
("Shell");
1.13 "Event of Default" shall mean an event where:
(a) an order is made or a resolution (whether requiring
confirmation or not) is passed for the winding up of the
Contractor; or
(b) (without the prior written consent of Britoil) the
Contractor suspends payment of its debts, becomes unable or
admits in writing its inability to pay its debts, makes a
general assignment for the benefit of or enters into any
composition or arrangement of any kind with its creditors,
ceases or threatens to cease to carry on business or
disposes of all or (without the prior written consent of
Britoil) a substantial part of its assets; or
(c) a receiver, administrator, administrative receiver or
trustee is appointed in respect of the Contractor or over
all or substantially all of its assets; or
(d) there occurs any of the events specified in (a) to (c) above
or any event analogous thereto in relation to Reading &
Bates.
1.14 "Guarantee" shall mean the performance guarantee entered into by
Reading & Bates with Britoil dated of even date herewith.
1.15 "Other Contractors" shall mean those contractors employed by
Britoil at the offshore Site for the purposes of, or in
connection with, the Services, excepting the Contractor and its
Sub-contractors, and which Britoil has notified the Contractor of
in writing prior to their locating to the offshore Site.
1.16 "Reading & Bates" shall mean Reading & Bates Corporation, a
Delaware Corporation, having its principal office at 901
Threadneedle, Suite 200, Houston, Texas USA.
1.17 "Section" shall mean the attachments hereto marked Section "A",
"B" and "C", which attachments form parts of the Contract.
1.18 "Services" shall mean the services to be provided by the
Contractor under the Contract as more particularly described in
item 1 of Section "A" hereto and may include such other services
as may from time to time be formally agreed between the
Contractor and Britoil (for the avoidance of doubt, Services does
not include the provision of third party services provided by, or
for the account of Britoil).
1.19 "Site" shall mean any location on United Kingdom Continental
Shelf where the Contractor is providing the Services.
1.20 "Sub-contractors" shall mean those persons or companies of any
tier engaged by the Contractor in connection with the Services.
1.21 "Vessel" shall mean the semi-submersible support vessel "Iolair"
or such other appropriate vessel as may from time to time to
agreed between Britoil and the Contractor.
1.22 "Well" shall mean any well in connection with which the Services
are provide and for the purposes of this Contract shall mean and
include all facilities upstream of the loading flange on an oil
tanker or the connection flange to a fixed production platform.
Words importing the singular include the plural and vice versa where the
context so requires.
2. BRITOIL'S REPRESENTATIVE
2.1 Britoil's Representative shall be responsible for monitoring the
Services and shall, subject to the provisions of the Contract,
have the necessary authority to stop or suspend any part of the
Services which in his opinion is not performed to a satisfactory
standard.
2.2 In addition to the duties defined hereunder Britoil's
Representative is authorized to require that the Contractor
provide such other services that Britoil's Representative deems
necessary to ensure the safety of the Well and the completion of
the Services. All reasonable additional costs incurred by the
Contractor in complying with such requirement will be reimbursed
by Britoil.
3. CONTRACTOR'S REPRESENTATIVE
3.1 The Contractor's Representative shall be available at all
reasonable times and shall be authorized to receive, on behalf of
the Contractor, and arrange to execute all instructions in
connection with the Services received from Britoil's
Representative.
4. CONTRACTOR'S EQUIPMENT
4.1 The Contractor shall provide the Vessel and other Contractor's
Equipment suitably modified to support the performance of the
activities described in Section "A" hereto.
Equipment and services customarily supplied by third parties,
such as Coiled Tubing Unit, ROV Unit, stimulation equipment,
completion riser, and relate services, as well as, all subsea
tools, equipment and services are to be supplied by third parties
for account of Britoil.
4.2 Contractor's Equipment, including the Vessel, shall be fully
certified and/or classified by the Certifying Authority or
appropriate Statutory Authority prior to the commencement of the
Services hereunder. In addition, the Contractor shall maintain
such certification and classification in full effect for the
duration the Services.
5. CONTRACTOR'S PERSONNEL
5.1 The Contractor shall provide Contractor's Personnel in accordance
with attachment 2 hereto Section "D" and such additional
personnel as Britoil may, from time to time and on reasonable
notice, reasonably require.
5.2 At the written request of Britoil's Representative, the
Contractor shall, at its cost, secure the lawful removal of
Contractor's Personnel from duties under the Contract, who for
just cause, is unacceptable to Britoil. Contractor shall replace
any person so removed without delay at Contractor's expense with
a competent substitute approved by Britoil.
6. BRITOIL PERSONNEL
6.1 Britoil Personnel shall be suitably experienced, trained and
qualified to perform the obligations of Britoil under the
Contract.
6.2 At the written request of the Contractor, Britoil shall, at its
cost, secure the lawful removal of Britoil Personnel from duties
under the Contract, who for just cause, is unacceptable to the
Contractor.
7. HEALTH, SAFETY, WELFARE AND WORKING ENVIRONMENT
The Contractor shall comply fully with the provisions for Health, Safety
and Working Environment contained in Attachment 1 hereto.
8. EQUIPMENT SUPPLIED BY BRITOIL
8.1 Britoil shall provide Britoil Equipment as necessary for the
proper execution of the Services by the Contractor. Such Britoil
Equipment, if applicable, shall be stored by the Contractor on
the Contractor Equipment.
8.2 The Contractor shall use such Britoil Equipment solely for the
execution of Services.
8.3 The Contractor shall take all reasonable care of Britoil
Equipment in the Contractor's possession and return such Britoil
Equipment (where appropriate) to Britoil upon expiry of its use.
Any necessary servicing, maintenance repair of such Britoil
Equipment by the Contractor shall be carried out at mutually
agreed rates.
8.4 Britoil shall provide, and shall procure that Other Contractors
provide, to the Vessel prior to transportation to the
Contractor's Equipment all statutory, certification and COSHH
data relative to Britoil Equipment or Other Contractor's
equipment.
9. INFRINGEMENT
9.1 The Contractor shall hold harmless and indemnify Britoil from and
against all claims proceedings and liabilities for or on account
of infringement or alleged infringement of any patent rights,
design, trade mark or name or other protected right of any third
party or any legislation or regulation of any competent authority
with regard to the disclosure or use of any technology,
equipment, machinery, materials or process disclosed or provided
to Britoil the Contractor or Sub-contractors and shall defend at
its sole expense any and all such proceedings.
9.2 Britoil shall hold harmless and indemnify the Contractor from and
against all claims proceedings and liabilities for or on account
of infringement or alleged infringement of any patent rights,
design, trade mark or name or other protected right of any third
party of any legislation or regulation of any competent authority
with regard to the disclosure or use of any technology,
equipment, machinery, materials or process disclosed or provided
to the Contractor (either for its use or for use by any Sub-
contractor ) by Britoil and shall defend at its sole expense any
and all such proceedings.
9.3 Both parties shall at all times have the right to be represented
by their ow counsel and to participate in the defence of any such
proceedings if both shall be made parties defendant thereto.
Each party shall give notice in writing forthwith to other of any
such claims and proceedings as aforesaid and shall supply other
party with all information and documents in connection therewith
as it may reasonably require.
10. LIABILITY AND INDEMNITY
10.1
(a) The Contractor shall defend, indemnify and hold harmless
Britoil, from and against any and all liability for loss,
damage or destruction of the Contractor's Equipment and any
other property of the Contractor whether arising under
contract or in tort, and against all costs, claims,
demands, proceedings and causes of action resulting
therefrom, regardless of how such loss, damage or
destruction occurs, and irrespective of the negligence
(whether sole or contributory) or other fault of or breach
of duty or statutory strict liability of Britoil or Britoil
Personnel.
(b) Britoil shall defend, indemnify and hold harmless the
Contractor, from and against any and all liability for
loss, damage or destruction of Britoil's Equipment and any
other property of Britoil whether arising under contract or
in tort, and against all costs, claims, demands,
proceedings and causes of action resulting therefrom
regardless of how such loss, damage or destruction occurs,
and irrespective of the negligence (whether sole or
contributory) or other fault or breach of duty or statutory
strict liability of the Contractor or Contractor's
Personnel.
10.2 The Contractor shall defend, indemnify and hold harmless Britoil,
from and against any and all liability for death, illness or
injury to any Contractor's Personnel or the loss of or damage to
the property of Contractor's Personnel whether arising under
contract or in tort, and against all costs, claims, demands,
proceedings, and causes of action resulting therefrom, regardless
of how such death, illness or injury or loss of or damage to the
property occurred, irrespective of the negligence (whether sole
or contributory) or other fault or breach of duty or statutory
strict liability of Britoil or Britoil Personnel.
10.3 Britoil shall defend, indemnify and hold harmless the Contractor,
from and against any and all liability for death, illness or
injury to Britoil Personnel or the loss of or damage to the
property of Britoil Personnel whether arising under contract or
in tort, and against all costs, claims, demands, proceedings and
causes of action resulting therefrom, regardless of how such
death, illness o injury or loss of or damage to the property
occurred, irrespective of the negligence (whether sole or
contributory) or other fault or breach of duty or statutory
strict liability of the Contractor or Contractor's Personnel.
10.4 The Contractor shall assume all responsibility for and shall
defend, indemnify and hold harmless Britoil, from loss or damage
arising from pollution or contamination of any nature or
substance whatsoever by consumable products such as diesel,
lubricants or grease (except as otherwise provided in Sub-clause
10.5(d) below) originally taken to the Site by or on behalf of
the Contractor for the purpose of the conduct of the Services by
the Contractor irrespective of whether such loss or damage is
caused by the negligence (whether sole or contributory) or other
fault or breach of duty or statutory strict liability of the
Contractor or the Contractor's Personnel.
10.5 Subject to the provisions contained in Sub-clauses 10.1(a), 10.2
and 10.4, Britoil shall assume all responsibility for and shall
defend, indemnify and hold harmless the Contractor, from and
against any and all liability for loss, distraction or damage
arising from the following events whether in contract or in tort
and against all claims, demands, proceedings and causes of
actions resulting therefrom regardless of how such loss or
destruction occurs and irrespective of the negligence (whether
sole or contributory) or other fault or breach of duty, or
statutory strict liability of the Contractor or Contractor's
Personnel:
(a) loss of or damage to any Well or, for loss of or any damage
to any formation or reservoir or mineral resources.
(b) blowout or other uncontrolled flow of oil or gas or other
substances originating from any Well including the cost of
bringing the Well under control.
(c) loss or damage arising from pollution, contamination or
seepage other than as described in Clause 10.4 which results
from fire, blowout, cratering, or any loss of control of the
hole or other flow of oil, gas or other substances
originating or emanating from the Well.
(d) pollution or contamination arising from the disposal of oil
materials such as, but not limited to, oil emulsion, oil
based or chemically treated drilling fluids, contaminated
cuttings, lost circulation materials and other substances,
where the responsibility for disposal lies with Britoil.
10.6 Notwithstanding any other provision of the Contract, Britoil
shall not be liable for and the Contractor shall defend,
indemnify and hold Britoil, harmless from and against indirect or
consequential losses or damages (including, without limitation,
loss of profit, loss of product, loss of production or business
interruption) suffered by the Contractor in connection with the
performance of the Contract regardless of how such losses or
damages occur and irrespective of whether such loss or damage is
based on contract, negligence, statutory strict liability or
other breech of duty. Notwithstanding any other provision of the
Contract the Contractor shall not be liable for and Britoil shall
defend, indemnify and hold the Contractor, harmless from and
against indirect or consequential losses or damages (including,
without limitation, loss of profit, loss of product, loss of
production or business interruption) suffered by Britoil in
connection with the performance of the Contract regardless of how
such losses or damages occur and irrespective of whether such
loss or damage is based an contract, negligence, statutory strict
liability or other breach of duty .
10.7 Without prejudice to the other provisions of this Clause 10, the
Contractor shall defend, indemnify and hold harmless Britoil, and
its employees, servants and agents from and against any and all
liability for death, illness or injury to any third party or for
loss of or damage to any third party's property and against all
claims, demands, proceedings and causes of action resulting
therefrom, to the extent caused or contributed to by the
negligence, statutory strict liability, or other breach of duty
of the Contractor or its employees, servants or agents.
10.8 Without prejudice to the other provisions of this Clause 10,
Britoil shall defend, indemnify and hold harmless the Contractor,
and its employees, servants and agents from and against any and
all liability for death, illness or injury to any third party or
for loss of or damage to any third party's property and against
all claims, demands, proceedings and causes of action resulting
therefrom, to the extent caused or contributed to by the
negligence, statutory strict liability, or other breach of duty
of Britoil or its employees, servants or agents.
10.9 The Contractor shall use its best endeavours to enter into mutual
hold harmless arrangements with Other Contractors at the offshore
Site in respect of liabilities in relation to Contractor's and
Other Contractors' respective property and personnel.
A proforma mutual hold harmless document is attached to these
Conditions of Contract as Attachment 3, which shall form the
basis for such hold harmless arrangements.
10.10 Subject to the Contractor using its best endeavours to enter into
such mutual hold harmless arrangements with Other Contractors, to
the extent that the Contractor is unable to enter into such
mutual hold harmless arrangements due to any of the Other
Contractors:-
i) refusing to do so, or
ii) requiring indemnification on terms substantially and
materially more onerous to the Contractor than those set out
in Attachment 3,
then provided the Contractor has used its best endeavours to
settle such dispute, Britoil shall upon written request from the
Contractor indemnify the Contractor to the extent set out in sub-
clauses 10.1(b) and 10.3 in respect of such Other Contractor's
personnel and equipment.
10.11 The benefit of any indemnity given by an indemnifying party
pursuant to this Clause 10 shall extend to the indemnified party
its Co-venturers and its and their Affiliates and its and their
officers, directors, employees, servants and agents.
10.12 The indemnity obligations of this Clause 10 shall continue
notwithstanding the completion or termination of the Contract.
11.INSURANCE
11.1 The Contractor shall provide and maintain or shall cause to be
provided and maintained, with a first class insurance company,
insurance adequate to cover its risks and liabilities hereunder
and to fulfil the requirements of national, local or other
government authority or other appropriate bodies.
11.2 The Contractor shall obtain from its underwriters a waiver of all
rights of subrogation in respect of the liabilities assumed by
the Contractor hereunder against Britoil, its Co-venturers and
their respective Affiliates in connection with the Services to be
performed hereunder. Furthermore the Contractor shall arrange
for Britoil, its Co-venturers and its and their respective
Affiliates to be named as additional assured on all policies of
insurance, to the extent of the liabilities assumed by the
Contractor under the Contract.
The Contractor shall procure that any Sub-contractor hereunder
obtains, from its underwriters of insurance, waivers of all
rights of subrogation as aforesaid and shall arrange for Britoil,
Co-venturer's and its and their respective Affiliates similarly
be named as additional assured on all policies of insurance.
11.3 The Contractor shall, ensure that, in addition to the
requirements of Clause 11.1 above, the following are provided and
maintained and require its Sub-contractors to effect and
maintain:
(a) Employer's Liability Insurance including, but not by way of
limitation, Maritime Employer's Liability Insurance, in
respect of its liability for loss, damage, injury or death
arising out of or in connection with the performance of the
Contract for a sum of not less than required by law or US
$500,000 per person, whichever is the greater.
(b) Protection and Indemnity Insurance and/or Marine Liability
Insurance with minimum policy limits equal to the
replacement value of the Vessel, provided by the Contractor,
with minimum cover of US $25 million and general third party
liability insurance with a minimum cover of L2 million.
(c) Hull and Machinery Insurance including, but not by way of
limitation, collision Liability Insurance with minimum
policy limits equal to market value of the Vessel, provided
by the Contractor.
(d) Wreck and debris removal insurance sufficient to comply with
the liabilities detailed in Clause 12.
(e) War risk insurance cover on the Contractor's Equipment.
11.4 The Contractor shall, if so requested by Britoil, provide Britoil
with copies of all its Certificates of insurance relating to the
Contractor's operations herein and shall produce to Britoil
either the aforesaid Certificates of Insurance or the current
premium receipts in respect thereof.
11.5 The Contractor shall give not less than thirty days (seven days
with respect to war risk cover) written notice to Britoil of any
intended material change to any of its insurance policies
including any change of Insurer through whom such insurance are
effected.
11.6 Britoil shall, to the extent of the liabilities assumed by
Britoil under the Contract, obtain from its underwriters a waiver
of all rights of subrogation in respect of the liabilities
assumed by Britoil hereunder against Contractor, its Affiliates
and the Sub-contractors in connection with the Contract.
12.SUNKEN EQUIPMENT AND MATERIALS
12.1 The Contractor shall at its own expense, if required by
Governmental authorities or if required by Britoil for
operational reasons, raise and remove from the sea-bed the
Contractor's Equipment, including any of the Contractor's
Equipment which may have been lost overboard due to any act or
omission of the Contractor or its Sub-contractors during the
course of operations hereunder or, otherwise deal with the
Contractor's Equipment in accordance with the Britoil
instructions, notwithstanding that the Contractor's Equipment,
may be insured and whether or not declared a loss.
12.2 In the event that Contractor fails to carry out its obligations
hereunder Britoil may buoy and light the sunken Contractor's
Equipment and, at its sole discretion, may elect, at anytime
thereafter, to raise, remove and dispose of same and shall
recover all costs and expenses so incurred from the Contractor.
12.3 Prior to moving the Contractor's Equipment from Site Britoil may,
at its own expense, conduct a sea-bed survey to satisfy itself of
the Contractor's compliance with its obligations hereunder.
Britoil's failure to timely notify the Contractor of sunken
Contractors Equipment shall relieve the Contractor of any
obligation to raise, remove and dispose of such Contractor's
Equipment. Nothing in this Sub-Clause shall relieve the
Contractor of its obligations to comply with the requirements of
Governmental authorities under Clause 12. 1.
13.INVOICING AND PAYMENT
13.1 Payment in respect of the Services performed by the Contractor
shall be made in accordance with the provisions of Section "B"
of this Contract.
13.2 Invoices, bearing this Contract's number, shall be rendered in
the currency(ies) specified in Section "B" and submitted to the
following address:-
Britoil Public Limited Company
c/o Andersen Consulting
Seafield House
Hill of Rubislaw
Anderson Drive
Aberdeen AB9 2BZ
Attention: Mr. G. Brown
13.3 Subject to the provisions contained in Clause 13.4 below Britoil
shall pay invoices within 30 days of receipt into the
Contractor's nominated bank account or as otherwise agreed in the
Contract.
13.4 If Britoil shall dispute any invoice in whole or in part, it
shall advise the Contractor of the amount in dispute and shall
request a credit note for said amount. Such credit note shall be
required by Britoil before paying any undisputed items on the
invoice. Britoil shall endeavour to make such payments within
the original stipulated payment period from receipt of invoice.
Upon resolution of any disputed items the Contractor shall re-
invoice Britoil for such agreed sums previously invoiced and
credited.
13.5 Payment by Britoil of any invoice submitted by the Contractor
shall not discharge or release the Contractor from any of its
obligations under the Contract or be deemed approval or
acceptance of Services covered by such invoice.
13.6 Britoil may deduct from payments hereunder any withholding taxes
require by any United Kingdom Governmental Authority and shall
account therefor to the Government Authority. Britoil shall
provide the Contractor with original tax receipts or the official
documentation of amounts so deducted.
13.7 To the extent that payments to be made under this Contract are
subject to any Value Added Tax (VAT) the proper amount of such
tax shall be shown as a separate item on the Contractor's
invoice. All prices/rates contained in the Contract are
exclusive of VAT.
14.AUDIT
14.1 The Contractor, its Affiliates, Sub-contractors, suppliers and
agents, shall maintain true and correct sets of records in
connection with the Services and transactions related thereto and
shall retain all such records for a period of no less than twenty
four (24) months after expiry or termination of this Contract.
14.2 Britoil and Co-venturers, including any independent firm of
auditors appointed by Britoil or by the Co-venturers, shall have
the right at Britoil's expense to audit the relevant books and
accounts of the Contractor, including supporting documentation,
in relation to all reimbursable charges paid for by Britoil under
this Contract at any time up to two years from expiry or
termination of the Contract.
14.3 The Contractor shall make available to Britoil or the Co-
venturers or appointed auditors the relevant books and accounts
and supporting documentation requested by Britoil or the Co-
venturers or appointed auditors within fifteen days of the
written request for provision of such books, accounts or
documentation for the purposes set out in Clause 14.2.
14.4 In addition to Britoil's rights as shown in sub-clause 14.2,
Britoil shall have the right to be a party with the Contractor in
the joint inspection and audit of the records of Sub-contractors
or suppliers specific to the Services. The selection of sub-
contracts or purchase orders to be inspected and audited shall be
determined by Britoil.
14.5 Any incorrect payments, identified by any independent firm of
auditors, made by Britoil in respect of the aforesaid
reimbursable or other charges shall be reimbursed by or paid to
the Contractor as the case may be, within sixty (60) days of such
amounts being agreed by the parties.
15.ASSIGNMENT AND SUB-CONTRACTING
15.1 Britoil may assign all or any part of its rights, liabilities or
obligations herein to an Affiliate or Co-venturer upon the same
terms and conditions as those agreed between the parties hereto
by giving written notice of such assignment to the Contractor.
15.2 The Contractor shall not assign or sub-contract all or any part
of its rights, liabilities, or obligations herein without
Britoil's prior written consent, such consent not to be
unreasonably withheld.
Such consent, if given, shall not relieve the Contractor of any
of its liabilities or obligations under the Contract and
Contractor shall remain responsible for the acts, omission,
defaults and negligence of any Sub-contractor, its personnel or
agents as fully as if they were acts, omissions, defaults or
negligence of the Contractor, Contractor's Personnel or agents.
16.TERMINATION WITHOUT CAUSE
16.1 Without prejudice to and in addition to Britoil's rights stated
elsewhere in the Contract, Britoil may at its absolute discretion
terminate the Contract at any time without cause in whole or in
part on giving 30 days written notice subject to the provisions
of Clause 16.2.
16.2 If the Contract is terminated pursuant to Clause 16.1 by Britoil,
the Contractor and Britoil shall have the following rights,
obligations and duties:
16.2.1 Britoil shall assume and become liable for and shall indemnify
the Contractor against all obligations and commitments that the
Contractor may have therefore in good faith undertaken or
incurred in connection with the Contract and in accordance with
the terms thereof, including but not limited to contractual
obligations and commitments to Sub contractors. Britoil shall
thereupon be entitled to all rights, set-offs and benefits held
by the Contractor under or in connection with such obligations
and commitments.
16.2.2 Britoil shall reimburse the Contractor, insofar as such charges
shall not have already been covered by payments to the Contractor
for:
a) such portion or portions of the Services executed or
performed in accordance with the Contract up to the date of
termination.
b) documented and evidenced costs in respect of any expenditure
reasonably incurred by the Contractor in expectation of
completing the Services.
c) documented and evidenced additional demobilisation expenses
incurred above those already provided for in the Contract
after the date of termination, unless provision for the same
is made under the Contract.
d) such reasonable amount to be agreed between Britoil and the
Contractor with respect to expected profit, such amount being
proportionate to the elapsed duration of the Contract and its
initial expected duration.
16.2.3 In the event that the Contractor obtains work for the Vessel
prior to expiry of the period referred to in 16.1 above, then
Britoil's liability for payment under 16.2 shall be reduced by
the income received by the Contractor for said period.
17.TERMINATION WITH CAUSE
17.1 In the event of a breach by the Contractor of any of the terms
or conditions of the Contract or in the event that the
Contractor fails to proceed with the Services with due
diligence; or persistently or flagrantly neglects to carry out
its obligations under the Contract; or fails to maintain an
acceptable level of safety or comply with the requirements of
Clause 7 hereof; or fails to comply with any reasonable
instructions given to it in writing by Britoil or Britoil's
Representative in connection with the Services; or if the
Contractor subcontracts all or any part of the Services without
the prior consent of Britoil; or if the Contractor should
abandon the Contract, then Britoil may give notice in writing to
the Contractor to make good such breach, failure, neglect or
contravention and if so required, shutdown operations.
Should the Contractor fail to commence to remedy or refuse or
fail to prove to Britoil's satisfaction that it has taken, and
is continuing to take, measures to remedy the matters specified
in the notice within a period of not more than seven days or
such other reasonable longer period as Britoil may agree to,
Britoil shall have the right to terminate the Contract forthwith
upon expiry of the period of notice or upon such later date
determined by Britoil, subject to completion of operations to
secure the current activities.
17.2 The Contract shall be terminated upon the total loss (as
hereinafter defined) of the Contractor's Equipment or part
thereof so as to prevent it from carrying out the Services.
Such termination shall be at the date and time of such total
loss or at such time as the relevant part of the Contractor's
Equipment is no longer able to perform the Services as
aforesaid.
In the context of this Clause "total loss" shall mean an actual,
constructive, compromised or arranged total loss of the
Contractor's Equipment or any element thereof.
17.3 Britoil shall have the right to terminate the Contract if the
Contractor fails to maintain the Classification and/or
Certification of the Contractor's Equipment.
17.4 In the event that the Contractor's Equipment is shutdown for
repair and as a result the Contractor is prevented from
performing the Services for a continuous period of more than
fourteen days, other than whilst the Contractor is carrying out
modifications to comply with Britoil's requirements, then
Britoil shall have the right to terminate the Contract by giving
notice in writing to the Contractor.
17.5 In the event of termination under this Clause 17, Britoil shall
not be liable for any further payment to the Contractor other
than any payment which may be due in respect of Services
provided prior to the date of termination as to the Contractor
by Britoil.
18.NON-PERFORMANCE BY CONTRACTOR
In the event the Contractor fails to perform any of its obligations or
to provide any of the Contractor's Equipment or in the event that the
Contractor's Equipment fails to meet the manufacturer's recommended
performance for such equipment so as to make operations unsafe or to
reduce substantially the efficiency thereof, Britoil's Representative
shall notify the Contractor in writing specifying the nature of such
failure and shall require the Contractor to make good or procure that
it be made good that part of the Services which has not been performed
in accordance with the Contract. Should the Contractor fail to
remedy, or commence and proceed with timely due diligence to remedy
such default or failure within ten (10) calendar days (or such other
period as may be agreed), then Britoil shall, immediately thereafter,
without prejudice to any rights available to Britoil under common law
or statute, have the right to take any of the following actions:
(a) to require the Contractor to provide suitable alternative
Contractor's Equipment (including if appropriate an alternative
Vessel by mutual agreement); or
(b) to shut down operations until such time as the Contractor shall
have made good the specified failure. For any such period of
shutdown Britoil shall pay the Contractor zero dayrate; or
(c) to terminate the Contract if such failure is not remedied in
accordance with the revisions of Clause 17.1.
19.SUSPENSION
19.1 Britoil may at any time suspend the performance of the Services
or any part thereof by giving not less than seven days written
notice to such effect to the Contractor.
19.2 Britoil shall inform the Contractor of any specific requirements
it may have with regard to the safety of operations currently
that it requires the Contractor to implement prior to such
suspension being effected.
19.3 Any extra cost, including that occasioned by the subsequent
resumption of the Services, incurred by the Contractor in giving
effect to Britoil's instruction will be reimbursed by Britoil.
19.4 During the period of any such suspension, except where due to
the default or negligence of the Contractor or as in accordance
with Clause 19.5 below, Britoil will pay the Contractor in
accordance with the provisions of Section "B".
19.5 Subject to agreement between the parties hereto the Contract may
be suspended to enable the Contractor to use the Contractor's
Equipment to perform work for another operator.
Any special conditions applying to such suspension shall be
agreed in writing between Britoil and the Contractor.
20.TAX INFORMATION AND INDEMNITY
20.1 The Contractor shall pay any tax (except as otherwise provided
in Clause 13.7), and shall ensure that due payment is made by
its Sub-contractors under the Contract of any tax, which may be
assessed upon the Contractor or any such Sub-contractor in
connection with the activities of the Contractor or any such
Sub-contractor under the Contract.
20.2 The Contractor shall make all payments to its Personnel or to
its Sub-contractors net of tax or other deductions which the
Contractor is required to make in compliance with its statutory
obligations.
20.3 The Contractor shall supply and shall ensure that any of its
Sub-contractors under the Contract shall supply all information
to Britoil in connection with activities under the Contract as
may be necessary to enable Britoil or an Affiliate to comply
with the lawful demand for such information by any government
authority.
20.4 In the event that the Contractor or any of its Sub-contractors
or any of its or their employees are non-resident in the United
Kingdom for the purposes of Section 830 of the Income and
Corporation Taxes Act 1988, the Contractor, including any Sub-
contractor hereunder, shall make an application to the Inland
Revenue for the issue, to Britoil, of a Certificate under the
provisions of Paragraph 7 of Schedule 15 of the Finance Act,
1973.
In the event that the Contractor, including any Sub-contractor
hereunder, fails to procure that the Inland Revenue issue a
Certificate to Britoil, or such Certificate is subsequently
cancelled, then Britoil may withhold from any payment due to the
Contractor an amount which, in the reasonable opinion of
Britoil, represents the amount of tax which may be assessed on
Britoil by the government authorities in the event of non-
payment by the Contractor of any taxes which may be due arising
out of or in connection with the Services provided under the
Contract.
20.5 In the event that Britoil or any of its Affiliates are made
accountable under law for payment of any tax or penalty which
may be assessed on the Contractor or its Sub-contractor's or its
or their employees arising out of or in connection with the
Services provided under the Contract then Britoil shall, prior
to payment of any tax or penalty, give written notice to the
Contractor of the assessment.
The Contractor shall, without dispute as to the amount of tax or
penalty lawfully assessed , pay to Britoil the full amount of
any such tax or penalty within thirty days of the Contractor
receiving notification from Britoil of the assessment.
In the event that the Contractor fails to make such payment
Britoil may withhold, from the Contractor any payment due to the
Contractor, and amount equal to the aforesaid assessment.
20.6 The Contractor shall indemnify and keep indemnified Britoil
against any and all payments required to be made and losses,
costs or expenses of whatsoever nature incurred by Britoil as a
result of or in connection with any failure by the Contractor or
any of its Sub-contractor's to comply with the provisions of
this Clause.
20.7 For the purposes of this Clause only, the expression 'tax' shall
mean, where the context so admits, any tax, duty or other charge
of any nature whatsoever, including any penalty or interest,
assessed or levied on the Contractor in respect of the
Contractor's activities or the activities of its Sub-
contractor's or its or their employees under the Contract, by
any government or other authority having jurisdiction at the
Site.
20.8 The obligations contained in this Clause shall continue
notwithstanding completion or termination of the Contract.
20.9 Britoil shall provide to the Contractor the original receipt(s)
or other official documentation of any amounts withheld under
this Clause.
21.INDEPENDENT CONTRACTOR
The Contractor shall, in the performance of the Services, act as an
independent contractor and neither it nor Contractor's Personnel shall
have any authority to act as agent for or on behalf of Britoil.
22.CONFIDENTIAL INFORMATION
22.1 All information obtained by the Contractor during the course or
conduct of the Services shall be held confidential and shall not
be divulged by Contractor, Contractor's Personnel, its servants,
Sub-contractors or agents to any third party.
This obligation shall not apply to information which:
(i) is part of the public domain; or
(ii) was in the Contractor's possession prior to award of the
Contract and which Britoil did not notify the Contractor
as being confidential, or
(iii) was received from third parties having to the best of the
Contractor's knowledge the right to disclose such
information, or
(iv) is required to be disclosed by the Contractor or by its
Sub-contractors in order to comply with the requirements
of this Contract or of any law, regulations or authority.
22.2 The obligations contained in this Clause shall continue
notwithstanding the completion or termination of the Contract.
23.PUBLICITY
23.1 The Contractor shall not publish or permit to be published any
information about or photographs in connection with the Services
or about Britoil's business without the prior written consent of
Britoil.
23.2 The. obligations contained in this Clause shall continue
notwithstanding the expiry or termination of the Contract.
24.COMPLIANCE WITH LAWS AND REGULATIONS
24.1 The Contractor shall comply with, and give all notices required
by, an regulatory or statutory authority in relation to the
performance of the Contract. The Contractor shall ensure that
Contractor's Personnel observe and comply with all such laws,
rules and regulations or instructions required by any regulatory
or statutory authority.
24.2 Subject to the provisions of Clauses 9 and 10, the Contractor
shall indemnify Britoil against any and all penalties which may
be lawfully asserted or assessed because of the Contractor's
infraction of laws and regulations of any tier applicable at the
Site and Britoil shall indemnify the Contractor against any and
all penalties which may be lawfully asserted or assessed because
of Britoil's infraction of laws and regulations of any tier
applicable at the Site.
24.3 In the event of changes and/or amendments to the laws and
regulations governing the Contract, having an impact on the
Contractor's obligations under the Contract then, except where
such changes and/or amendments were already schedule to come
into effect during the Contract and had been announced prior to
the date hereof, Britoil shall reimburse the Contractor its
demonstrated reasonable additional costs incurred in connection
with such change. Such additional costs shall, if applicable,
take into consideration the remaining anticipated life and
future use of the Contractor's Equipment.
25.CONDUCT OF THE CONTRACTOR
25.1 The Contractor, shall not, and shall procure that its Affiliates
and Subcontractor's shall not, at any time during the Contract
or in any manner nor for any purpose whatsoever entice either
directly or indirectly any person employed by Britoil. The
Contractor shall have a procurement policy and procedures which
comply with the Britoil Policy on Business Conduct and Code of
Business Conduct. The Contractor will ensure that all
Contractor's Personnel involved in its procurement process are
familiar with the content of the policy and procedures.
25.2 The Contractor shall not, except for bona fide medical purpose,
keep or dispense any drugs or alcoholic liquors to any Personnel
on the Contractor's Equipment and will use every reasonable
effort to prevent any sale, barter, gift, dispensation or other
disposal of same to be made by any of the Contractor's
Personnel.
25.3 The Contractor shall take all reasonable precautions and shall
use its best endeavour to prevent any riotous or unlawful
behaviour by or amongst any of Contractor's Personnel.
26.FREEDOM FROM LIENS
26.1 The Contractor shall use its best endeavours to prevent the
imposition of any liens or attachments, arising out of the
Contractor's default, by or on behalf of any third party
including its suppliers, its Personnel or its Sub-contractor's
on Contractor's Equipment or Britoil's Equipment and shall hold
harmless and indemnify Britoil from and against the same.
26.2 If, notwithstanding the best endeavour of the Contractor, as a
result of the imposition of such liens or attachments Britoil
incurs costs or expenses or becomes liable for payment, then
Britoil shall have the right to withhold amount equal to any
such costs or expenses or payment incurred or made by Britoil
from any payments due to the Contractor hereunder.
26.3 No assignment or transfer by the Contractor of rights to monies
due to Contractor hereunder shall, unless Britoil has given its
prior written approval such assignment, have any force or effect
so far as Britoil's rights concerned until all such liens or
attachments shall have been completely discharge.
27.RECORDS AND REPORTS
The Contractor shall maintain and provide Britoil with copies of such
certificates, data and information relating to the Services, as
Britoil may reasonably request or as will enable Britoil to comply
with its statutory reporting obligation.
28.INSPECTION OF THE SITE
28.1 The Contractor shall be deemed to have satisfied itself in
respect of, but not limited to, the scope and nature of the
Services, local facilities, and environment conditions and all
other matters which may affect the performance of the Services.
28.2 The Contractor shall have no claim for extra payment nor shall
it be relieved or excused from any of its responsibilities,
liabilities or obligations hereunder arising out of Contractor's
failure to comply with the provisions of Clause 28.1 unless such
claim arises out of a change which became effective after, but
which was not public knowledge prior to, the date hereof or
arises out of erroneous information provided by Britoil or its
Affiliates.
29.LIQUIDATION OR INSOLVENCY
If the Contractor commences liquidation proceedings or becomes
insolvent, or has a receiving order made against it, or compounds with
its creditors, or being corporation commences to be wound up, not
being a members' voluntary winding up for the purpose of
reconstruction or amalgamation, or carries on its business under a
receiver for the benefit of its creditors or any of them, Britoil
shall be liberty either;
(i) to terminate the Contract forthwith by notice in writing to the
Contractor or to the receiver or liquidator or to any person in
whom the Contract may have become vested, or
(ii) to give such receiver, liquidator, or other person the option of
carrying out the Services subject to his providing a guarantee
for performance of the Services up to an amount to be agreed
without prejudice to any right of action or remedy which shall
have accrued or shall accrue thereafter to Britoil.
In the event of the voluntary winding up of the Contractor for the
purposes of reconstruction or amalgamation, the Contractor shall seek
the prior written agreement of Britoil to such reconstruction or
amalgamation, which agreement shall not be unreasonably withheld. The
Contractor shall obtain guarantees, satisfactory to Britoil, for the
continuing performance of the Contract from any reconstructed or
amalgamated company.
30.FORCE MAJEURE
30.1 A Force Majeure occurrence shall mean an occurrence beyond the
control and without the fault or negligence of the party
affected and which by the exercise of reasonable diligence the
said party is unable to prevent or provide against.
30.2 In the event of a Force Majeure occurrence neither party shall
be liable for failure to perform their obligations and both
parties shall bear their own respective costs arising from and
attributable to Force Majeure.
30.3 In the event of a single incident or occurrence of Force Majeure
lasting more than thirty (30) days, the parties hereto shall
agree an appropriate course of action which may include the
decision to terminate the Contract without this giving rise to
any claim for compensation from either of the parties hereto,
other than for the Services carried out up to the time of such
termination
31.NOTICES
31.1 All notices in respect of the Contract shall be given in writing
to the parties hereto at the address specified hereunder.
Notices shall be deemed to be given when sent by registered mail
or telex or delivered by hand and a receipt obtained.
31.2 Notices to the Contractor shall be sent to:-
Reading & Bates (Caledonia) Limited
Rotech House
Whytemyers Avenue
Mastrick Industrial Estate
ABERDEEN AB26 6HQ
Attention: A. Bakoni
Fax No. (01224) 690355
31.3 Notices to Britoil shall be sent to:-
Britoil Public Limited Company
Farburn Industrial Estate
Dyce
ABERDEEN AB2 0PB
Attention: Nominated Britoil Representative and copied to
Contracts and Procurement Manager, Atlantic Frontier Programme.
Telex no: 739831 and Fax no. 01224 833933.
32.LIQUIDATED DAMAGES
32.1 In addition to and notwithstanding the provision of Clause 29,
it is the intention of the Parties that the liability of the
Contractor and Reading & Bates for its or their inability to
perform the Services under this Contract as a result of an Event
of Default shall be regulated by the provisions of this Clause
32. Britoil therefore agrees that it shall only be entitled to
recover from Reading & Bates and/or the Contractor and Reading &
Bates and/or the Contractor shall only be obliged to pay to
Britoil liquidated and ascertained damages in accordance with
the following clauses 32.2 and 32.3 if the Contractor and/or
Reading & Bates fails to perform the Services which it is
obliged to perform under this Contract and/or the Guarantee
following an Event of Default and not otherwise and Britoil
shall not be entitled to demand liquidated and ascertained
damages as aforesaid if termination of this Contract occurs by
reason of the term or duration thereof having expired.
32.2 If an Event of Default occurs and the Contractor and/or Reading
& Bates are unable to perform the Services as aforesaid Britoil
shall have the right t recover either directly from Reading &
Bates (under the Guarantee) and/or Contractor (under this
Contract) or, (at Britoil's sole discretion) by deducting from
any monies due or which may become due to the Contractor the sum
"LD" which sum shall be calculated as follows:
LD=NR x (CR - the Rate)
Without prejudice to the liability of the Contractor the
liability of Reading & Bates in respect of LD under the
Guarantee shall not exceed US $500,000.
32.3 Such payment as aforesaid by Reading & Bates and/or Contractor
shall be liquidated and ascertained damages for any such Event
of Default and Reading & Bates and the Contractor acknowledge
that the foregoing assessment comprises a genuine pre-estimate
of Britoil's loss. Payment of liquidated damages by Reading &
Bates and/or the Contractor (to the full extent due under the
Guarantee and this Contract respectively) or the deduction
thereof by Britoil (to such extent) shall relieve Reading &
Bates and/or the Contractor from its or their obligations under,
the Guarantee(insofar only as it relates t this Contract) and
the Contract.
32.4 For the purposes of this Clause 32 the following words and
expressions shall have the following meaning:-
"CR" means the day rate which an independent maritime surveyor
of international repute deems to be the then current open
market day rate in the Operating Area for a vessel
equivalent in respect o specification and standard to the
Vessel. The rate ascertained by such surveyor shall be
final and binding on the parties and the costs o such
surveyor shall be borne by Britoil;
"NR" means the number of days remaining under Section B -
Remuneration this Contract from the date of the Event of
Default; and
"Rate"means the rate payable under Section B - Remuneration of
this Contract.
32.5 In the event that the Contractor does not pay the liquidated
damages or there is no deduction thereof by Britoil in terms of
this clause 32 Reading & Bates liability under the Guarantee
(insofar as it relates to this Contract) shall not exceed US
$500,000.
33.APPLICABLE LAW AND LANGUAGE
The Contract shall be governed by and construed in accordance with
English Law and the parties hereto agree to submit to the jurisdiction
of the English Courts. The ruling language of the Contract shall be
English.
============================================================================
CONTRACT NO. 101237
PROVISION OF CONSTRUCTION SUPPORT VESSEL SERVICES
FOR FOINAVEN DEVELOPMENT
ATTACHMENT NO. 1 TO SECTION "C"
HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT
ITEM TITLE
1. Health, Safety and Environmental Management System
2. Compatibility Of HSE Management Systems
3. HSE Plan
4. Reporting
5. Statutory and Other Requirements
6. HSE Performance Standards
7. Working Conditions
8. Occupational Health and Medical Fitness
9. Waste Disposal and Environmental Safeguards
10. Right of Audit
11. Additional Documents
1.Health., Safety and Environmental Management System
1.1 Britoil places prime importance on health, safety and
environmental ("HSE") issues and requires that its contractors
and their sub-contractors subscribe to and actively pursue the
highest standards of HSE performance. The Contractor shall
therefore observe and comply with these HSE provisions.
1.2 The Contractor shall perform the Service under a formal system
which follows the principles outlined in the Health and Safety
Executive publication HS(G)65 "Successful Health and Safety
Management", as may be revised from time to time.
1.3 The Contractor's HSE management system shall be adequately
documented and shall be shown to be effective in implementing the
aims and objectives of the Contractor's HSE policy.
Without prejudice to the foregoing generality, the Contractor's
HSE management system shall:-
(a) incorporate measures which demonstrate that all Personnel
are competent to perform their tasks safely; and
(b) ensure that in the performance of the Service, all hazards
to the health of Personnel, Britoil staff and third parties
have been identified, assessed and eliminated where
possible or being controlled through formal planning
methods and procedures.
1.4 The Contractor shall be responsible for ensuring that all
Subcontractors and their personnel understand the principles and
requirements of these HSE provisions and that similar standards
apply to Subcontractor's HSE management systems.
2.Compatibility Of HSE Management Systems
2.1 The Contractor's HSE management system shall, where relevant, be
compatible with Britoil's HSE management system. The Contractor
shall liaise with the Britoil Representative to ensure that the
roles and responsibilities in both systems are clearly defined
and allocated and are clearly understood by all parties involved
in the Service.
2.2 Within the framework of his HSE management system, the Contractor
shall work to HSE performance standards which are compatible with
those in the Britoil HSE Management System.
2.3 Any critical interfaces between the Contractor and Britoil shall
be documented in the Contractor's Safety Management System
Document.
2.4 Where applicable, the Contractor shall ensure that similar
standards apply to the HSE management systems used by all Sub-
contractor(s).
3.HSE Plan
3.1 The Contractor shall prepare a plan for the management of all HSE
aspects of the Service, known as the "HSE Plan". The HSE Plan
shall be based on the requirements of the HSE management system.
3.2 The HSE Plan shall include an assessment of all identifiable HSE
risks associated with the Service and shall indicate the proposed
method of controlling those risks to an acceptable level. It
shall also include measurable and realistic targets for HSE
performance, covering, but not necessarily limited to:-
- Frequency of injuries which result in lost time (i.e. unfit
to resume normal duties the next day or next shift).
- Number of statutorily reportable events.
- Injury severity data.
- Predetermined targets for environmental emissions and waste
production.
- A follow-up system to ensure that all remedial actions
required by Britoil and from the Contractor's own reviews
and investigations of accidents and incidents are closed
out.
3.3 The HSE Plan shall include details of the proposed method of
auditing the effectiveness of the Contractor's HSE management
system as applied to the Service.
3.4 The HSE Plan shall form part of the Contract. It shall be
reviewed at least annually and updated as necessary to
incorporate any proposed changes to the Service and/or Contract.
4.Reporting
4.1 The Contractor shall prepare a quarterly written HSE report to
the Britoil Representative, covering the following matters as
relevant:-
- Progress made against the HSE Plan.
- An overview of all accidents and near-miss events.
- Performance against HSE targets.
- Total working hours for all Personnel.
- Details of the quantity and nature of any emissions and
waste generated.
- A summary of any equipment QAI reports.
- Copies of all inspection reports, including those provided
to external bodies.
- A summary of the status of remedial actions.
4.2 The Contractor shall also prepare an annual HSE report which
summarises his performance and that of Sub-contractor(s) during
the performance of the Service in the preceding year. This
report shall include the cumulative total number of accidents
near-misses and hours worked.
5.Statutory and Other Requirements
5.1 The Contractor shall observe and comply with all relevant and
current statutory requirements, approved codes of practice and
official guidance on HSE matters issued by the UK Government.
5.2 The Contractor shall take all necessary steps to ensure that all
Personnel comply with all relevant HSE legislation and guidance.
6 .HSE Performance Standards
6.1 The Contractor shall comply with Britoil's "Technical Integrity
Performance Standards" in the management of Technical integrity
as relevant to the service.
6.2 Where necessary and appropriate, the Contractor shall seek advice
from Britoil's HSQ Department on the interpretation of the HSE
Practices.
7.Working Conditions
The Contractor shall ensure that all Personnel are:-
(a) fully conversant with the working conditions at the work site,
the rules and standards relating to the Environment and the
hazards and risks associated with the Service to be provided.
(b) fully aware that they are expected to bring to the immediate
notice of their Supervisor all health, safety and environmental
risks which they believe not to be under adequate control, so
that action may be taken to prevent potential injuries or other
losses and provide a safe and healthy workplace.
8.Occupational Health and Medical Fitness
8.1 The Contractor shall ensure that all Personnel are medically fit
for the work to be done.
8.2 The Contractor shall formally advise the Britoil Representative
of any known medical disability or condition of any Personnel
which may adversely affect their own health and safety, or the
health and safe of others.
9.Waste Disposal and Environmental Safeguards
The Contractor and any Sub-Contractor(s) shall at all times in
providing the Service act to minimise the total quantity of wastes
arising from the performance of the Service and shall, in the conduct
of the Service and following completion thereof observe and comply
with all laws and regulations concerning the production, carrying,
keeping, treating and/or disposal of waste. If required by law, the
Contractor and or Sub-Contractor(s) shall forthwith register as a
Registered Waste Broker or Licensed Waste Manager.
10.Right of Audit
Britoil reserves the right to audit the Service to assure itself that
HSE matters are being managed and controlled in accordance with the
declared requirements of the Contractor's HSE management system and
Britoil's HSE performance standards.
11.Reference Documents
The following reference documents are available for review at
Britoil's Aberdeen offices by application to the Britoil
Representative:-
HSE Management System, Document No. HSQ 10.02.05.
HSE Practices, Document No. HSQ 00.04.01.
Safety Training Standards, Document No. HSQ 34.02.01.
Technical Integrity Performance Standards, Document No. XEG-G-93-W29
============================================================================
CONTRACT NO. 101237
PROVISION OF CONSTRUCTION SUPPORT VESSEL SERVICES
FOR FOINAVEN DEVELOPMENT
ATTACHMENT NO. 1 TO SECTION "C"
CONTRACTOR'S PERSONNEL
The following provisions shall apply to the Contractor with respect to
the provision of Contractor's Personnel for the provision of the
Services. Any and all costs associated with compliance with these
provisions are to the Contractor's account.
Numbers and Categories
The Contractor has the full responsibility for ensuring that with
respect to the overall Services being provided by the Contractor,
sufficient numbers of appropriately trained, certified, experienced and
qualified disciplines of Contractor's Personnel are available all times
to conduct all aspects of the Services in a safe, diligent and efficient
manner commensurate with good oil field practice.
The Contractor recognises that during the provision of the Services the
manning level requirements will require adjustment to suit the actual
operational situation. The Contractor will utilise its best efforts to
ensure manning levels are optimised to the most appropriate technical
and commercial levels for the benefit of this Atlantic Frontier
Programme, Clair 1996 Extended Test as a whole.
The Contractor to advise Britoil
The Contractor's Representative shall advise the Britoil Representative
at the outset of the Services the projected number of Contractor's
Personnel proposed over the duration of the Services. It shall be the
responsibility of the Contractor's Representative to advise the Britoil
Representative of any significant adjustment to the previously advised
manning levels.
Any material adjustment to the number of Contractor's Personnel engaged
by the Contractor that impacts the remuneration provisions of the
Contract shall be formally agreed and registered by the Britoil
Representative and the Contractor's Representative.
Safety, Medicals and Survival Training
The Contractor shall ensure that all Contractor's Personnel are suitably
trained and skilled for the tasks to be undertaken, that they are in
possession of valid medical and combined fire fighting and survival
training certification throughout the duration of the Contract.
The requirement for such training and medicals shall be in accordance
with good oil field practice and as provided for within the current
UKOOA guidelines, except relation to personnel involved solely with the
flowline, tanker or tanker support vessel who will only occasionally
transfer to the rig.
The Contractor shall ensure that periodic training in relation to
safety, accident prevention and protection of the environment is carried
out at the Location. Training for specialised operations shall also be
provided. Records of such training and safety meetings shall be held by
the Contractor.
Safety Equipment and Protective Clothing
The Contractor shall ensure that adequate safety equipment and personal
protective clothing is available at all times to Contractor's Personnel.
Such safety equipment and protective clothing shall be to
internationally recognised standards and be suitable for the service and
environment that Contractor's Personnel are working in.
Passports
The Contractor shall ensure that Contractor's Personnel are in
possession of valid passports where applicable.
=============================================================================
CONTRACT NO. 101237
PROVISION OF CONSTRUCTION SUPPORT VESSEL SERVICES
FOR FOINAVEN DEVELOPMENT
ATTACHMENT NO. 1 TO SECTION "C"
MUTUAL INDEMNITY AND HOLD HARMLESS AGREEMENT
ENTERED INTO THIS............... DAY OF ............. 1995
BETWEEN:
(1)
(2)
etc
(hereinafter collectively referred to as the "SIGNATORIES "
Whereas:
(A) Britoil Public Limited Company (hereinafter referred to as
"Britoil") has entered into a contract or agreement with each of
the SIGNATORIES regarding the performance of services for
Britoil's operations in connection with, related to, or in
support of the Service (hereinafter referred to as "OPERATIONS");
(B) Britoil and each of the SIGNATORIES intended to enter into,
contracts or agreements with other contractors for the
performance of services in connection with, related to, or in
support of the OPERATIONS and certain of said other contractors
have signed, or may sign, counterparts or like mutual Agreements;
and
(C) The SIGNATORIES wish to modify the relationship inter se at
common law and avoid entirely disputes as to their liabilities of
damage or injuries to their respective property or employees;
Now, therefore, each of the SIGNATORIES in consideration of the
reciprocal covenants of each of the other SIGNATORIES agrees with them
that:
1. Indemnities by the SIGNATORIES
In relation to the carrying out of the OPERATIONS, each of the
SIGNATORIES shall be solely responsible for and shall defend,
indemnity and hold harmless the other SIGNATORIES (and their
respective GROUPS as defined below) against all loss, damage, costs,
expenses, claims or liability (including but not limited to legal
expenses) arising out of any claim or cause o action for.-
(i) sickness of, personal injury to or death of PERSONNEL (as defined
below) of the indemnifying SIGNATORY and/or of any members of its
GROUP, and
(ii) loss of or damage to any PROPERTY (as defined below) of the
indemnifying SIGNATORY and/or of any members of its GROUP; and
(iii) indirect, consequential or economic losses or damages
suffered by the indemnifying SIGNATORY and/or any members
of its GROUP (including but not limited to, loss of profit,
loss of use, vessel downtime, loss of production and
business interruption); and
(iv) pollution damages of whatsoever nature which are caused by the
escape discharge or emission from the PROPERTY of the
indemnifying SIGNATORY and/or any members of its GROUP, or within
their respective care, custody and/or control and
(v) any other losses, damages, liabilities, obligations or duties of
any kind of the indemnifying SIGNATORY and/or any member of its
GROUP,
arising out of or any way connected with the OPERATIONS howsoever cause
and irrespective of negligence in any form or other breach of duty
(statutory, contractual or other) on the part of any of the SIGNATORIES
and/or any members of their respective GROUPS and any other form of
liability including but not limited to strict liability.
2. Definitions, etc., Applicable to this Agreement
In this Agreement the following definitions apply:
(i) "GROUP" in relation to a SIGNATORY means the SIGNATORY in
question and its sub-contractors and its and their holding
subsidiary and affiliated companies of any tier and its and their
respective PERSONNEL.
(ii) "PERSONNEL" in relation to a SIGNATORY (or any member of its
GROUP) means its officers, directors, employees and agents
(including any person hired as a consultants and agency staff
hired through an employment or other agency).
(iii) "PROPERTY" in relation to a SIGNATORY (or any member of its
GROUP) includes vessels, equipment, machinery, tools, materials,
supplies, and other objects or items owned, rented, leased,
chartered or otherwise belonging to the party in question or the
member of the GROUP in question.
3. Co-operation in Relation to Claims
Each of the SIGNATORIES shall obtain endorsements (on all relevant
insurances effected or maintained by it which covers risks and
liabilities expressly assumed under the indemnities contained herein)
confirming that the underwriters and/or insurers of such insurances
waive all rights of subrogation against the other SIGNATORIES and their
respective GROUPS to the extent of the said risks and liabilities
expressly assumed hereunder.
EXHIBIT 10.11
DATED 8TH SEPTEMBER 1995
(1) BRITOIL PUBLIC LIMITED COMPANY
(2) READING & BATES (CALEDONIA) LIMITED
(3) READING & BATES CORPORATION
HEADS OF AGREEMENT
for the provision of
VESSEL SERVICES
===========================================================================
THIS AGREEMENT is made the 8th day of September 1995
BETWEEN:
(1) BRITOIL PUBLIC LIMITED COMPANY whose registered office is at
Burnside Road, Farburn Industrial Estate, Dyce, Aberdeen AB2 OPB
("Britoil")
(2) READING & BATES (CALEDONIA) LIMITED whose registered office is at
Harman House, 1 George Street, Uxbridge, Middlesex UB8 1QQ
("Contractor")
(3) READING & BATES CORPORATION, a Delaware corporation having its
principal office at 901 Threadneedle, Suite 200, Houston, Texas,
U.S.A. ("Holdings")
(all the above being together herein referred to as "the Parties")
WHEREAS:
(A) The Parties have entered into the Foinaven Services Agreement for
the short term utilisation of the Vessel.
(B) Britoil wishes to utilise the Vessel for the provision of
additional Services by the Contractor.
(C) The Parties wish to set out the terms of their agreement with
regard to the provision of Services and utilisation of the Vessel
after Conversion.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1.1 Definitions
In this Agreement, except where the context otherwise requires,
the following words and expressions shall have the following
meanings:
"Britoil"s means any equipment, item or material supplied,
Equipment" owned or hired by Britoil Group (other then
Contractor's Equipment) in connection with the
Services;
"Contractor's means the Vessel and any equipment, item or
Equipment" material supplied, owned or hired by the Contractor
Group in connection with the Services;
"Affiliate" means in respect of Britoil, The British Petroleum
Company plc and any company which is a subsidiary
of The British Petroleum Company plc within the
meaning of the Companies Act 1985;
"Affiliate" means in respect of the Contractor and/or Holdings
any company which is a subsidiary or holding
company of the relevant company or another
subsidiary of any such holding company, where
"subsidiary" and "holding company" shall have the
meanings assigned to them under Section 736 of the
Companies Act 1985;
"Agreement" means this agreement together with the Schedules;
"Britoil means Britoil and its Affiliates, co-venturers,
Group" agents and its or their employees, directors and/or
officers;
"Compensation" means the compensation payable to the Contractor
pursuant to Clause 8;
"Contractor means the Contractor and its Affiliates, sub-
Group" contractors, agents and its or their employees,
directors and/or officers;
"Conversion" means the conversion of the Vessel in accordance
with Clause 6;
"Conversion means the earliest of 1st June 1996 (or such other
Acceptance date as the Parties may agree) or such date when
Date" the maritime surveyor referred to in Clause 6.4
issues his final binding decision;
"Conversion means 1st June 1996 or such other date as the
Completion Parties may agree;
Date"
"Day" means any period of 24 hours commencing at 00.01
hours on any day and ending at 00.00 hours on the
following day;
"Event of means any event where:
Default"
(a) an order is made or a resolution (whether
requiring confirmation or not) is passed for
the winding up of the Contractor; or
(b) (without the prior written consent of Britoil)
the Contractor suspends payment of its debts,
becomes unable or admits in writing its
inability to pay its debts, makes a general
assignment for the benefit of or enters into
any composition or arrangement of any kind
with its creditors, ceases or threatens to
cease to carry on business or disposes of all
or (without the prior written consent of
Britoil) a substantial part of its assets; or
(c) a receiver, administrator, administrative
receiver or trustee is appointed in respect of
the Contractor or over all or substantially
all of its assets; or
(d) there occurs any of the events specified in
(a) to (c) above or any event analogous
thereto in relation to Holdings;
"Execution Date" means 31st October 1995 or such later date as
Britoil and the Contractor may agree;
"Foinaven meand the agreement of even date herewith
Services between Britoil and the Contractor for the
Agreement" provision of services by the Contractor in the
Foinaven Field;
"Gainshare means the minimum continuous period of 200
Period" Days in each Year referred to in Clause 7.2
notified to the Contractor pursuant to Clause
7.3;
"Operating Area" means the United Kingdom Continental Shelf;
"Option Notice" means any notice served on Britoil by the
Contractor pursuant to Clause 7.5;
"Option Period(s)" means the period(s) in any Year (during the
continuance of the Service Agreement) outwith
the nominated Gainshare Period;
"Option Rate" means US $66,500 per Day;
"Outstanding means those matters listed in Schedule 3;
Matters"
"Maximum Rate" means US $85,000 per Day;
"Minimum Rate" means US $48,000 per Day;
"Performance
Criteria" means the performance criteria for the Vessel
after Conversion as set out in Schedule 2;
"Schedules" means the 5 schedules to this Agreement;
"Services means the services agreement to supersede this
Agreement" Agreement in accordance with Clause 2;
"Services" means the services to be provided by the
Contractor to Britoil using the Vessel more
particularly set out in Schedule 1 (for the
avoidance of doubt, Services does not include
the provision of equipment or personnel of
third parties provided by or for the account
of Britoil, as set out in Schedule 1);
"Specification" means the specification of the Vessel and
associated equipment after Conversion to
support the performance of the activities set
out in Schedule 1;
"Specification means the earliest of 10th November 1995 or
Approval Date" such date when the maritime surveyor referred
to in Clause 6.3 issues his final binding
decision;
"Specification means 31st October 1995;
Proposal Date"
"Standard" means the standard required to ensure that
after Conversion the Vessel is in Class,
conforms with the Specification, meets the
Performance Criteria and is capable of
performing the Services in accordance with
good oil and gas field practice and complies
with all necessary licensing, regulatory and
governmental authorities applicable in the
Operating Area;
"Vessel" means the semi-submersible Vessel Iolair; and
"Year" means a period beginning at 00.01 hours on 1st
January in any year and ending at 00.00 hours
on 1st January of the next succeeding calendar
year.
1.2 The construction of this Agreement shall not be affected by any
heading herein.
1.3 This Agreement shall incorporate the Schedules which shall form
part hereof. If there is any inconsistency between the main body
of this Agreement and the Schedules or among the Schedules then
the main body of this Agreement shall have priority and thereafter
precedence shall be in descending order as listed below:
Schedule 1 Functional Service Specification
Schedule 2 Performance Criteria
Schedule 3 Outstanding Matters
1.4 The Parties agree that the definitions used in this Agreement
reflect the principles to be followed in the Services Agreement
but may require to be adjusted by mutual agreement to reflect the
requirements of the Services Agreement.
2. Finalisation of Services Agreement
2.1 The Parties have entered into this Agreement because certain
constraints make it impractical to finalise the terms and
conditions of the Services Agreement as at the date hereof. The
Parties agree that notwithstanding the execution of this Agreement
the Parties will work together in an efficient and constructive
manner to procure the resolution of the Outstanding Matters and
the execution of the Services Agreement as soon as reasonably
practicable and in any event by the Execution Date. For the
avoidance of doubt no Services will be provided and no payment
will be due or made until the Parties have executed the Services
Agreement.
2.2 The Services Agreement will incorporate the main principles set
out in this Agreement and will be negotiated to ensure that the
Services Agreement reflects the intent of this Agreement and has
full details reflecting the commercial, operational and practical
requirements relating to the provision of the Services. The
Parties agree that the terms of the Foinaven Services Agreement
shall provide the basis for discussion and the reaching of
agreement with regard to matters not already addressed in this
Agreement with such changes as may be deemed necessary or
appropriate to incorporate the principles set out in this
Agreement.
2.3 The services Agreement will consist of the following:-
Section "A" Scope of Service
Section "B" Remuneration
Section "C" Conditions of Contract
3. Aims and Objectives
The primary purpose of the gainshare arrangements set out in
Clauses 7 and 8 is to achieve business alignment between Britoil
and the Contractor. Britoil's primary objective is to cost
effectively support and maintain its development of substantial
oil production from subsea facilities in deepwater areas west of
Shetland. Britoil also has a requirement for subsea services
elsewhere in the Operating Area. Specifically Britoil requires:-
(a) conversion of the Vessel to provide the Services;
(b) flexible access to the Vessel year round with emphasis on
availability during good weather periods;
(c) the Contractor to enter into "alliance" arrangements with
Britoil's chosen well intervention and subsea service
providers; and
(d) a simple and effective process for management of the Vessel
whereby Britoil undertakes to plan utilisation of the Vessel,
giving Contractor as much notice as is practical under the
circumstances, and the Contractor takes responsibility for
marketing the Vessel outwith the times it is required by
Britoil.
The Contractor's objective is to achieve a reasonable return on
investment by sustaining high levels of utilisation of the Vessel
throughout the year from a combination of Britoil and third party
business.
It is envisaged that in due course an "Intervention Alliance" may
be formed to align all service providers involved with the
operations of Britoil west of Shetland. The Contractor will
actively participate in any such "Intervention Alliance". Within
this alliance it is Britoil's intention to agree on a risk/reward
arrangement which will motivate the participators to:-
(a) provide improved HSE performance;
(b) develop cost savings;
(c) improve vessel flexibility and responsiveness; and
(d) continually improve.
4. Duration
This Agreement shall commence the date hereof and shall continue
until superseded by the Services Agreement.
5. Warranty
5.1 The Contractor warrants that:-
(a) Contractor's Equipment shall be fit for the performance of
the Services to the Standard;
(b) it has or will procure the ability, qualifications, resources
and personnel to perform the Conversion and the Services;
(c) it shall perform or procure the performance of the Conversion
and/or the Services in the timely manner and in accordance
with the Standard and to Britoil's reasonable satisfaction;
(d) the Services, including all Contractor's Equipment and all
workmanship and designs carried out or procured by the
Contractor in connection with the Conversion and the Services
shall comply in all respects with this Agreement and the
Standard and shall be free from any material defects; and
(e) it has full power and authority to enter into this Agreement
and the Services Agreement.
6. Conversion
6.1 The Contractor and Britoil agree that as at the date hereof the
Vessel may not be fit for purpose to carry out the Services.
6.2 It is a fundamental term of this Agreement that by the
Specification Proposal Date the Contractor will work with Britoil
to provide a detailed proposal, including but not limited to,
plans, drawings, specifications and timetable and such other
information relating to the Conversion as Britoil may reasonably
require relating to the completion of the Conversion of the
Vessel. Britoil will assist the Contractor as far as is
reasonably practicable with regard to the preparation of such
proposal.
6.3 On or before the Specification Approval Date the Contractor and
Britoil shall agree the Specification of the Vessel to comply in
all respects with the Standard. If the Parties fail to reach such
agreement by the Specification Approval Date then either of
Britoil or the Contractor may refer the matter to an agreed
independent maritime surveyor of international repute who shall
review all relevant information and within 14 Days of referral to
him provide the Parties with his final written binding decision
detailing the works required to ensure that after the Conversion
the Vessel will comply with the Standard. The costs of such
surveyor shall be borne 50% by Britoil and 50% by the Contractor.
6.4 The Contractor agrees that on or before the Conversion Acceptance
Date all necessary works shall have been carried out so that the
Vessel complies in all respects with the Standard. If the Parties
do not agree that the Vessel meets the Standard by the Conversion
Acceptance Date then either of Britoil or the Contractor may refer
the matter to an agreed independent maritime surveyor of
international repute who shall review all relevant details as
aforesaid and within 14 Days (or as soon thereafter as reasonably
practicable) of referral to him provide the Parties with his final
written binding decision detailing the works (if any) required to
complete the Conversion to the Standard. The costs of such
surveyor shall be borne 50% by Britoil and 50% by the Contractor.
6.5 The Contractor will take all actions reasonably necessary
regardless of cost or expense to procure the completion of the
Conversion (Including but not limited to a full audit of the
Vessel and all necessary testing and approval by appropriate
licensing, regulatory and governmental authorities applicable in
the Operating Area) by the Conversion Completion Date.
6.6 For the avoidance of doubt Britoil shall not be liable for and the
Contractor shall be liable for, indemnify and hold harmless
Britoil and its Affiliates in respect of any claims, losses,
damages, costs, expenses and liabilities of whatever nature
arising in respect of the Conversion howsoever caused and
irrespective of the negligence or breach of duty (statutory or
otherwise) of the Britoil Group, except as otherwise provided in
Clauses 13.1(b) and 13.3 below.
7. Vessel Utilisation
7.1 Britoil may use the Vessel in accordance with this Clause 7
anywhere within the Operating Area where it or any of its
Affiliates is the designated operator for such area, where the
Vessel can safely operate within its capabilities.
7.2 The Contractor shall during each Year from 1st January 1996 until
31st December 2000 provide the Vessel to perform the Services for
Britoil for a minimum continuous period of 200 days.
7.3 By 1st November in each Year referred to in Clause 7.2 and on 1st
November 1995 Britoil shall, unless the Parties agree otherwise,
notify the Contractor in writing of the Gainshare Period for the
following Year.
7.4 The Contractor may, in consultation with Britoil for periods
during the Gainshare Period when Britoil does not require the
Services, with Britoil giving Contractor as much notice as is
reasonably practical under the circumstances, market the Vessel to
third parties for the provision of services at the open market
rate for utilisation of the Vessel. Income derived from such
third party business will, subject always to the provisions of
Clause 8, be paid direct to the Contractor.
7.5 The Contractor shall be entitled each Year from 1st January 1996
until 31st December 2000 to market the Vessel to third parties for
the provision of services during the Option Period(s). Prior to
entering into any binding contractual commitment with any bona
fide third party offering a serious proposal for utilisation of
the Vessel the Contractor shall, where scheduled commencement of
mobilisation of the Vessel for the provision of such services is
more than four calendar months away, provide Britoil with a
written Option Notice detailing the terms of such proposal.
Within 7 calendar Days of receipt of any Option Notice Britoil
will notify the Contractor if Britoil exercises its option to
utilise the Vessel for the same duration or longer during the
period specified in the Option Notice.
The day rate applicable during utilisation of the Vessel by
Britoil in such circumstances during the Option Period shall equal
the day rate offered by such third party if it falls between the
Minimum Rate and the Maximum Rate but for the avoidance of doubt
shall not be less than the Minimum Rate and not be greater than
the Maximum Rate. Should Britoil fail to exercise its option
hereunder then the Contractor shall be entitled to enter into a
contract for the utilisation of the Vessel by such third party
during the Option Period.
7.6 Britoil may at any time contract to use the Vessel to provide the
Services during the Option Period (subject to the provisions of
Clause 7.5) at the Option Rate.
7.7 If the Contractor can clearly demonstrate to Britoil's reasonable
satisfaction that the operating costs of the Vessel have increased
substantially in any Year the element of Maximum Rate, Minimum
Rate and Option Rate which is directly attributable to operating
cost shall be increased on 1st November in such Year in accordance
with the Retail Price Index. The base date for such calculation
shall be 1st January 1996.
7.8 Notwithstanding the foregoing provisions of this Clause 7, Britoil
may assign its rights under the Services Agreement to any third
party in respect of any Day during any Gainshare Period or Option
Period where Britoil has previously firmly committed to utilise
the Vessel during such Day.
7.9 The operational aspects relating without limitation to
mobilisation, demobilisation, delivery, redelivery, standby,
downtime, mechanical failure and repair of the Vessel shall
reflect in all respects the principles set out in the Foinaven
Services Agreement. For the avoidance of doubt Britoil shall not
be responsible for mobilisation or demobilisation of the Vessel
when the Vessel is to be utilised by a third party outside the
Operating Area. When the Vessel is mobilised or demobilised by
Britoil and there is no work location for the Vessel to proceed to<PAGE>
or from then mobilisation or demobilisation will be on the basis
the Vessel is always mobilised from the demobilised to Invergordon
before and after use of the Vessel by Britoil. If the Vessel is
continuing to a new work location Britoil shall cease to be
responsible for demobilisation costs as soon as the Vessel is
clear of Britoil's last location. If the Vessel is coming direct
from another location to work for Britoil then Britoil shall be
responsible for mobilisation costs as soon as the Vessel is clear
of its last location.
7.10 The Parties agree that circumstances may arise during either the
Gainshare Period or the Option Period that make it desirable for
the Vessel to operate within the Norwegian Continental Shelf.
Where such operations are at the request of Britoil then Britoil
and the Contractor will agree the terms (on a case by case basis)
on which any necessary upgrade to the Vessel and subsequent Day
rate are charged. Where use of the Vessel by a third party within
the Norwegian Continental Shelf is envisaged at any time then no
additional cost or expense will be payable by Britoil.
8. Compensation
8.1 In consideration of the Services provided by the Contractor
hereunder, Britoil shall pay to the Contractor the Compensation.
The Compensation shall be calculated in accordance with this
Clause 8.
8.2 During the Gainshare Period Britoil shall pay to the Contractor on
a monthly basis in arrears:-
(a) the Minimum Rate for each Day during the preceding month that
the Vessel was being utilised by Britoil; and
(b) 50% of the Minimum Rate for each Day during the preceding
month that the Vessel was stacked.
The Contractor shall submit an invoice to Britoil for the
sums payable under this Clause 8.3 within 3 Working Days of
the end of such month and Britoil shall pay such correctly
invoiced sums within 10 Working Days of receipt of invoice.
8.3 During the Gainshare Period the Contractor shall provide Britoil
with a schedule monthly in arrears, setting out the revenue
received by and/or payable to the Contractor in respect of third
party utilisation of the Vessel during the preceding month.
8.4 Within ten days of the end of the Gainshare Period the Contractor
shall (if TPR is greater than the Minimum Rate) pay to Britoil by
way of reduction in the Compensation the sum equal to "T" which
sum is calculated as follows:-
T = TPD x (TPR - Minimum Rate)
2
8.5 Within ten days of the end of the Gainshare Period Britoil shall
(if TPR is less than the Minimum Rate) pay to the Contractor by
way of increase in the Compensation the sum equal to "TL" which
sum is calculated as follows:-
TL = TPD x (Minimum Rate - TPR)
2
8.6 For the purposes of this Clause 8 the following words and
expressions shall have the following meanings:-
"TPD" means the number of Days during the Gainshare
Period that the Vessel is utilised by third
parties; and
"TPR" means the average day rate paid for third party
utilisation of the Vessel during the Gainshare
Period.
8.7 For the avoidance of doubt no sums shall be payable by the
Contractor to Britoil in respect of any income payable to or
received by the Contractor for utilisation of the Vessel during
the Option Period.
8.8 The Parties agree that during the 1996 Gainshare Period the
Conversion may not be complete and that in such circumstances the
Minimum Rate may not be an appropriate Day rate and accordingly
the Parties will agree a Day rate for the provision of Services
which will be between US $30,000 and the Minimum Rate per Day to
reflect progress made with the Conversion as at such time.
9. Services
9.1 The Contractor and Holdings will ensure that at all times
throughout the period of the Services Agreement the Vessel
complies in all respects with the Standard.
9.2 The Contractor will operate the Vessel on a 24 hour basis and will
ensure that the Vessel is provided with sufficient crew to operate
and manage the Vessel in accordance with good oil and gas field
practice and to Britoil's satisfaction.
10. Force Majeure
The Services Agreement will contain provisions relating to force
majeure which reflect in all respects the principles set out in
the Foinaven Services Agreement.
11. Taxation
The Services Agreement will contain provisions relating to
taxation which reflect in all respects the principles set out in
the Foinaven Services Agreement.
12. Health, Safety and Environment
The Services Agreement will contain provisions relating to Health,
Safety and Environment which reflect in all respects the
principles set out in the Foinaven Services Agreement.
13. Liability and Indemnity
13.1 (a) The Contractor shall defend, indemnify and hold harmless the
Britoil Group, from and against any and all liability for
loss, damage or destruction of the Contractor's Equipment and
any other property of the Contractor Group in connection with
this Agreement and/or the Services Agreement whether arising
under contract or in tort, and against all costs, claims,
demands, proceedings and causes of action resulting
therefrom, regardless of how such loss, damage or destruction
occurs, and irrespective of the negligence (whether sole or
contributory) or other fault of or breach of duty or
statutory strict liability of the Britoil Group.
(b) Britoil shall defend, indemnify and hold harmless the
Contractor Group, from and against any and all liability for
loss, damage or destruction of Britoil's Equipment and any
other property of the Britoil Group in connection with this
Agreement and/or the Services Agreement whether arising under
contract or in tort, and against all costs, claims, demands,
proceedings and causes of action resulting therefrom
regardless of how such loss, damage or destruction occurs,
and irrespective of the negligence (whether sole or
contributory) or other fault or breach of duty or statutory
strict liability of the Contractor Group.
13.2 The Contractor shall defend, indemnify and hold harmless the
Britoil Group, from and against any and all liability for death,
illness or injury to any of the Contractor Group in connection
with this Agreement and/or the Services Agreement whether arising
under contract or in tort, and against all costs, claims, demands,
proceedings, and causes of action resulting therefrom, regardless
of how such death, illness or injury occurred, irrespective of the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Britoil Group.
13.3 Britoil shall defend, indemnify and hold harmless the Contractor
Group, from and against any and all liability for death, illness
or injury to any of the Britoil Group in connection with this
Agreement and/or the Services Agreement whether arising under
contract or in tort, and against all costs, claims, demands,
proceedings and causes of action resulting therefrom, regardless
of how such death, illness or injury occurred, irrespective of the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Contractor Group.
13.4 The Contractor shall assume all responsibility for and shall
defend, indemnify and hold harmless the Britoil Group, from loss
or damage arising from pollution or contamination of any nature or
substance whatsoever from consumable products such as diesel,
lubricants or grease (except as otherwise provided in sub-clause
13.5(d) below) originally taken to the Vessel by or on behalf of
the Contractor or emanating from Contractor's Equipment for the
purpose of the conduct of the Services by the Contractor
irrespective of whether such loss or damage is caused by the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Britoil Group.
13.5 Subject to the provisions contained in sub-Clauses 13.1, 13.2 and
13.4, Britoil shall assume all responsibility for and shall
defend, indemnify and hold harmless the Contractor Group, from
loss or damage arising from the following events irrespective of
the negligence (whether sole or contributory) or other fault or
breach of duty, or statutory strict liability of the Contractor
Group:
(a) loss of or damage to any Well or, for loss of or any damage
to any formation or reservoir or mineral resources;
(b) blowout or other uncontrolled flow of oil or gas or other
substances originating from any Well up to the point of
discharge of same into the Contractor's Equipment including
the cost of bringing the Well under control;
(c) loss or damage arising from pollution, contamination or
seepage which result from fire, blowout, cratering, or any
loss of control of the hole or other flow of oil, gas or
other substances originating or emanating from the Well; and
(d) pollution or contamination arising from the disposal of oil
materials such as, but not limited to, oil emulsion, oil
based or chemically treated drilling fluids, contaminated
cuttings, lost circulation materials and other substances
where the responsibility for disposal lies with Britoil.
13.6 Notwithstanding any other provision of this Agreement and/or the
Services Agreement the Britoil Group shall not be liable for and
the Contractor shall defend, indemnify and hold the Britoil Group
harmless from and against indirect or consequential losses or
damages (including, without limitation, loss of profit, loss of
product, loss of production or business interruption) suffered by
the Contractor Group in connection with the performance of this
Agreement and/or the Services Agreement whether such loss or
damage is based on contract, negligence, statutory strict
liability or other breach of duty. Notwithstanding any other
provision of this Agreement and/or the Services Agreement the
Contractor Group shall not be liable for and Britoil shall defend,
indemnify and hold the Contractor Group harmless from and against
indirect or consequential losses or damages (including, without
limitation, loss of profit, loss of product, loss of production or
business interruption) suffered by the Britoil Group in connection
with the performance of this Agreement and/or the Services
Agreement whether such loss or damage is based on contract,
negligence, statutory strict liability or other breach of duty.
13.7 Without prejudice to the other provisions of this Clause 13, the
Contractor shall defend, indemnify and hold harmless the Britoil
Group against any and all liability for death, illness or injury
to any third party or for loss of or damage to any third party's
property and against all claims, demands, proceedings and causes
of action resulting therefrom, to the extent caused or contributed
to by the negligence, statutory strict liability or other breach
of duty on the part of the Contractor Group.
13.8 Without prejudice to the other provisions of this Clause 13,
Britoil shall defend, indemnify and hold harmless the Contractor
Group from and against any and all liability for death, illness or
injury to any third party or for loss of or damage to any third
party's property and against all claims, demands, proceedings and
causes of action resulting therefrom, to the extent caused or
contributed to by the negligence, breach of duty or wilful
misconduct of the Britoil Group.
13.9 The benefit of any indemnity given by an indemnifying Party
pursuant to this Agreement and/or the Services Agreement shall
extend to the indemnified Party's group. Therefore, for the
purposes of this Agreement and/or the Services Agreement, Britoil
contracts on its own behalf and expressly as agent on behalf of
and as trustee for the benefit of all persons who are or may be
from time to time part of the Britoil Group and the Contractor
contracts on its own behalf and expressly as agent on behalf of
and as trustees for the benefit of all persons who are or may be
from time to time part of the Contractor Group and all such
persons shall, to this extent, be, or be deemed to be parties to
this Agreement
13.10 The indemnity obligations of this Clause 13 shall continue
notwithstanding the completion or termination of this Agreement.
14. Insurance
The Services Agreement will contain provisions relating to
insurance which reflect in all respects principles set out in the
Foinaven Services Agreement.
15. Liquidated Damages
15.1 It is the intention of the Parties that the liability of the
Contractor and Holdings for its or their inability to perform the
Services under this Agreement as a result of an Event of Default
shall be regulated by the provisions of this Clause 15. Britoil
therefore agrees that it shall only be entitled to recover from
Holding and/or the Contractor and Holdings and/or the Contractor
shall only be obliged to pay to Britoil liquidated and ascertained
damages in accordance with the following clauses 15.2 and 15.3 if
the Contractor and/or Holdings is unable to perform the Services
which it is obliged to perform under this Agreement and/or the
Guarantee and not otherwise following an Event of Default, and
Britoil shall not be entitled to demand liquidated and ascertained
damages as aforesaid if termination of this Agreement occurs by
reason of the term or duration thereof having expired.
5.2 If an Event of Default occurs and as aforesaid the Contractor
and/or Holdings are unable to perform the Services Britoil shall
have the right to recover either directly from Holding and/or the
Contractor or (at Britoil's sole discretion) by deducting from any
monies due or which may become due to the Contractor the sum "LD"
which sum shall be calculated as follows:
LD = ((200 x NG) + DCG)) x (CR - Minimum Rate)
The figure LD shall be discounted to take account of the fact
that it represents advance payment in respect of future loss.
The discount calculation shall be referred by Britoil to a
Chartered Accountant of international repute who shall
ascertain the final figure which represents LD after
discounting, such discount calculation will use as its basis
the then current base rate of the National Westminster Bank
plc. The figure so ascertained will be final and binding on
the Parties and will be deemed to represent LD> The costs of
such Chartered Accountant shall be borne by Britoil. In the
case of Holdings LD shall not exceed US $3,000,000.
15.3 Such payment as aforesaid by Holdings and/or the Contractor shall
be liquidated and ascertained damages for any such Event of
Default and Holdings and the Contractor acknowledge that the
foregoing assessment comprises a genuine pre-estimate of Britoil's
loss. Payment of liquidated damages by Holdings and/or the
Contractor or the deduction thereof by Britoil shall relieve
Holdings and/or the Contractor from its or their obligations under
this Agreement and/or the Guarantee.
15.4 For the purposes of this Clause 15 the following words and
expressions shall have the following meanings:-
"CR" means the Day rate which an independent maritime
surveyor of international repute deems to be the then
current open market Day rate in the Operating Area for a
vessel equivalent in respect of Specification and
Standard to the Vessel. The rate ascertained by such
surveyor shall be final and binding on the Parties and
the costs of such surveyor shall be borne by Britoil;
"DCG" means the number of Days remaining in the then current
Gainshare Period at the time of the Event of Default;
"NG" means the number of Gainshare Periods (excluding the
then current Gainshare Period) remaining under this
Agreement; and
"Guarantee" means the guarantee referred to in Clause 20.
16. Confidentiality
Each of the Parties undertakes to keep matters of a commercially
sensitive nature arising relative hereto, strictly confidential
and shall obtain from its personnel working in connection with
this Agreement appropriate confidentiality undertakings.
17. Assignment
Britoil may assign its rights and obligations hereunder to any
Affiliate at any time. This Agreement is personal to the
Contractor who may not assign, or dispose of any of its rights or
obligations hereunder, or subcontract or otherwise delegate
without Britoil's prior written consent (which consent shall not
be unreasonably withheld) any of its obligations under this
Agreement.
18. Extension of Services Agreement
The Parties will have the right to extend the Services Agreement
for a further period on terms and conditions to be agreed between
Britoil and the Contractor. The Contractor will not commit to
provide the Vessel to any third party after the expiry of the term
of the Services Agreement without prior consultation with Britoil.
In any event the Parties will agree by 31 March 1999 the extension
of the Services Agreement as provided above and with the
applicable contract Day rate not to exceed the then current
Maximum Rate and not be less than the then current Minimum Rate as
the same may have been increased in accordance with the Services
Agreement. If Britoil and the Contractor have not agreed to the
terms of such extension by 31 March 1999, Contractor shall,
notwithstanding anything to the contrary in this Clause 18, have
the right to commit to provide the Vessel to any third party.
19. Relationship of Parties
Nothing in this Agreement shall create, or be deemed to create, a
partnership between the Parties.
20. Guarantee of Performance; Deed of Covenant
20.1 Holdings shall upon execution of the Services Agreement deliver to
Britoil a guarantee (in a form substantially similar to that
contained in Schedule 4) for the Contractor's performance of the
Services and shall procure the granting of a opinion letter in a
form substantially similar to that contained in Schedule 5, if so
requested. For the avoidance of doubt such guarantee shall
supersede any existing guarantee granted by Holdings to Britoil in
connection herewith.
20.2 The Contractor and Britoil shall upon execution of the Services
Agreement enter into a supplemental deed amending Clause 2.2 of
the Deed of Covenant entered into by them of even date herewith,
inserting the new details of the liquidated damages clause
contained in the Services Agreement.
21. Waiver
Any Waiver by any Party of a breach of any provision of this
Agreement shall not be considered as a waiver of any subsequent
breach of the same or any other provision.
22. Severance
If any provision of this Agreement is held by any court or other
competent authority to be void or unenforceable in whole or part,
the other provisions of this Agreement and the remainder of the
unaffected provisions shall continue to be valid.
23. Notices
23.1 Any notice or other information required and authorised by this
Agreement to be given by either Party to the other may be given by
hand or sent (by first class pre-paid post, telex, cable,
facsimile transmission or comparable means of communication) to
the other Party at the address referred to herein or to such other
address as notified hereunder for such purpose.
23.2 Any notice or information given by post under Clause 23.1 which is
not returned to the sender as undelivered shall be deemed to have
been given on the 2nd day after the envelope containing the same
was so posted; and proof that the envelope containing any such
notice or information was properly addressed, and sent by first
class pre-paid post, and that it has not been so returned to the
sender, shall be sufficient evidence that such notice or infor-
mation has been duly given.
23.3 Any notice or information sent by telex, cable, facsimile
transmission or comparable means of communication shall be deemed
to have been duly sent on the date of transmission, provided that
a confirming copy thereof is sent by first class pre-paid post to
the Party receiving such transmission at the address as specified
in Clause 23.1 within 24 hours after transmission.
24. Governing Law
This Agreement shall be governed by and construed in accordance
with English Law and the Parties submit to the non-exclusive
jurisdiction of the Courts of England and Wales.
IN WITNESS WHEREOF the parties hereto have signed this Agreement the
day and year first written above.
for and on behalf of BRITOIL PUBLIC LIMITED COMPANY
for and on behalf of READING & BATES (CALEDONIA) LIMITED
for and on behalf on READING & BATES CORPORATION
===========================================================================
SCHEDULE 1
FUNCTIONAL SERVICE SPECIFICATION
The Services to be provided in the Operating Area will include but are
not limited to, the activities listed in this Schedule.
The Contractor will work for relevant Britoil operated assets, to
provide the Vessel (and other Contractor's Equipment) for each asset to
undertake their activities. The allocation of the Services to each
Britoil operated asset which calls for them shall be coordinated by a
nominated Britoil representative and a nominated Contractor
representative.
The services include provision of the Vessel, other Contractor's
Equipment, marine crew complement, Vessel maintenance and shore side
management team,
PART 1
The services shall comprise the provision of expertise, contractor's
personnel and contractor's equipment including the Vessel after
Conversion at all times working in association with a number of service
contractors on the Vessel to enable any of the following activities to
be carried out in the Operating Area:
A Tree Installation
Installation of a subsea christmas tree (and flowbase) on a
suspended well (Tree size approx. 4m x 4m x 4m, weight approx. 40
tonnes). This may include removal of debris or pressure retaining
cap from wellhead, installation and leak testing of tree, removal
of plugs from well. Trees will be run or retrieved on rigid riser
simultaneously with the coiled tubing BoP and LRP (all supplies by
Britoil). To improve rough weather performance tree landing will
use active heave compensation and splash zone position guidance.
B Well Hook Up
This may include installation, pull in, hook up and function/leak
testing of:
- flexible jumper hoses between manifold and well,
- control umbilicals between Subsea Umbilical Termination (SUT)
and well.
Full function testing of tree following installation.
Connectors used will include the DMaC Connector (current max
flowline size 10" x 8" x 6").
C Well Intervention
By coil tubing (typically 6000m of 2 3/8" tubing), wireline
(slickline/3/16" braided) or electric line. Types of
intervention will include:
- Well Logging
- Well clean up, Chemical treatment and stimulation (i.e.
including acid and cement)
- Well maintenance (gas lift valve replacement, scale mill out,
installation and retrieval of plugs and DHSVs etc)
- Water/Gas shut off (using plugs, cement, gels etc)
- Fishing/junk retrieval
- Well abandonment (plugs, tubing perforation, cement)
- N2 kick off
- Coiled tubing sidetracks
D Subsea Construction
This may include:
- medium lift subsea construction activities such as
installation of manifolds, clump weights (12m x 7m, 120
tonnes), and SSIVs.
- installation and testing of flowline and umbilical jumpers
- Installation of FPSO risers (reels typically 5m wide by 8m
diam, 220 tonnes)
- subsea connectors will include use of DMaC.
It is accepted that such work may require substantial equipment
removal/mobilisation and possibly some specific Vessel
modification to be mutually agreed which will be at Britoil's
expense. To facilitate this as far as practical, deck equipment
should be modular.
E ROV Support
General ROV support as required (eq to pipelay or heavy lift
construction).
F Subsea Inspection, Repair and Maintenance
General IRM of all subsea equipment to be carried out by third
parties.
G Accommodation
The Vessel may be used for short term accommodation if required,
with workers being shuttled by helicopter to FPSO, construction
barge etc.
Included in the daily rate is catering for all Contractor's
personnel and up to 20 Britoil and/or third party personnel. A
day rate for extra personnel up to a limit will be agreed.
H Fuel and Transportation
Fuel, transportation of Contractor's personnel and supplies
between shorebase and the Vessel and all third party services
shall be provided by, or shall be to the account of, Britoil.
PART II
Roles & Responsibilities
The roles and responsibilities of Britoil, the Contractor and other
service providers (at Britoil's cost) shall reflect the following:-
Role Britoil Contractor Other
Service
Provider
A. Vessel Services
- Structural capability *
- Fuel *
- Safety Case *
- Maintenance *
- Dry docks *
- Marine Crews *
- Supply boat/
helicopter/logistics *
- Accommodation for [ ] *
- Catering for POB
up to [ ] *
- Onshore management *
- Derrick/Mast *
- Crane capacity of [ ] *
- Hydraulic control package *
- Existing DP capability *
- Suitable workfloor over moonpool *
- Active Heave compensation *
B. Service Operations
- Coiled tubing
operations * *
- Wireline operations * *
- Subsea tree running/
retrieval/handling * *
- Riser storage/
handling/tensioning * *
- Subsea well abandonment *
- All service equipment
and personnel (eg. CT unit,
completion riser, stimulation
units, ROV unit) *
N.B. Items where more than one party is indicated as responsible are
those where it is intended the Contractor provides a facility
where such activity can be carried out on the Vessel by another
service provided using its own equipment.
===========================================================================
SCHEDULE 2
Performance Criteria
The Parties agree that it is anticipated that conversion of the Vessel
for the purposes outlined in Schedule 1 will not require a major change
to the hull and structure of the Vessel, outwith the current vessel
design envelope. Consideration will be given to the advantages of
cross bracings or blisters or other modifications to improve the
efficiency and life of the Vessel or increase deck load capability.
The need for such modifications will be determined by mutual agreement
and in the context of the requirements of Schedule 1. The DP system as
upgraded for utilisation of the Vessel for the Foinaven Services
Agreement will be maintained by the Contractor for the provision of the
Services and accepted as satisfactory for the performance of the
Services.
=========================================================================
SCHEDULE 3
Outstanding Matters
Item Matters to be Finalised Action
Schedule I,
Part 1C Contractor to confirm Vessel Contractor
capability re coiled tubing
sidetracks
Schedule I,
Part 1D Contractor to confirm Vessel Contractor
capability and Parties to
agree re clump weights
Schedule I,
Part 1G Day rate and number of Britoil/
additional personnel to be Contractor
agreed
Schedule II,
Part 2A Contractor to confirm Contractor
accommodation and catering
capabilities
Schedule II,
Part 2A Crane Capacity to be Britoil/
confirmed Contractor
==========================================================================
SCHEDULE 4
[Guarantee]
==========================================================================
SCHEDULE 5
[Opinion Letter]
Exhibit 11
READING & BATES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of
common shares outstanding 60,085,177 56,864,290 59,846,582 55,951,631
========== ========== ========== ==========
Net income (loss) $ 9,100 $ (4,005) $ 11,163 $ (11,534)
Less dividends paid on
$1.625 Convertible
Preferred Stock (1,212) (1,214) (3,642) (3,644)
---------- ---------- ---------- ----------
Adjusted net income (loss)
applicable to common
shares outstanding -
assuming no dilution $ 7,888 $ (5,219) $ 7,521 $ (15,178)
========== ========== ========== ==========
Net income (loss) per
common share - assuming
no dilution $ .13 $ (.09) $ .13 $ (.27)
========== ========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of
common shares outstanding 60,085,177 56,864,290 59,846,582 55,951,631
Assume conversion of
securities:
$1.625 Convertible
Preferred Stock 8,663,126 8,668,010 8,666,364 8,668,010
8% Senior Subordinated
Convertible Debentures 783,686 743,497 783,686 743,497
8% Convertible Subordinated
Debentures 16,661 16,661 16,661 16,661
---------- ---------- ---------- ----------
Adjusted common shares
outstanding-fully diluted 69,548,650 66,292,458 69,313,293 65,379,799
========== ========== ========== ==========
Adjusted net income
(loss) applicable to
common shares outstanding
-assuming no dilution $ 7,888 $ (5,219) $ 7,521 $ (15,178)
Adjustments:
Interest on 8% Senior
Subordinated Convertible
Debentures 814 700 2,328 2,003
Interest on 8% Convertible
Subordinated Debentures 578 541 1,671 1,563
Dividends paid on $1.625
Convertible Preferred
Stock 1,212 1,214 3,642 3,644
---------- ---------- ---------- ----------
Adjusted net income (loss)
applicable to common
shares outstanding -
assuming full dilution $ 10,492 $ (2,764) $ 15,162 $ (7,968)
========== ========== ========== ==========
Net income (loss) per common
share - assuming full
dilution (antidiluive) $ .15 $ (.05) $ .22 $ (.12)
========== ========== ========== ==========
</TABLE>
Exhibit 15
Reading & Bates Corporation
We are aware that Reading & Bates Corporation has incorporated by
reference in its Registration Statements No. 33-44237, No. 33-50828 , No.
33-50565, No. 33-56029 and No. 33-62727 its Form 10-Q for the quarter
ended September 30, 1995, which includes our report dated October 16, 1995
covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by
our firm or a report prepared or certified by our firm within the meaning
of Sections 7 and 11 of the Act.
Arthur Andersen LLP
Houston, Texas
October 23, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Reading & Bates Corporation for the nine months
ended September 30, 1995 and is qualified in it entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 34,363
<SECURITIES> 0
<RECEIVABLES> 44,773
<ALLOWANCES> 873
<INVENTORY> 9,914
<CURRENT-ASSETS> 92,838
<PP&E> 834,937
<DEPRECIATION> 309,860
<TOTAL-ASSETS> 620,572
<CURRENT-LIABILITIES> 78,630
<BONDS> 0
<COMMON> 3,062
2,985
0
<OTHER-SE> 341,010
<TOTAL-LIABILITY-AND-EQUITY> 620,572
<SALES> 0
<TOTAL-REVENUES> 153,018
<CGS> 0
<TOTAL-COSTS> 93,648
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 11,697
<INCOME-PRETAX> 13,402
<INCOME-TAX> 1,539
<INCOME-CONTINUING> 11,163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,163
<EPS-PRIMARY> .13
<EPS-DILUTED> .22
</TABLE>
